United Kingdom: BoE hold view reinforced – Nomura
Nomura’s Global Markets Research team, including Josie Anderson, George Buckley and Andrzej Szczepaniak, notes that UK CPI data for August came in broadly as expected, with headline inflation at 3.1% and core and services measures unchanged.
Nomura's research team, comprising Josie Anderson, George Buckley, and Andrzej Szczepaniak, reports that UK inflation data for August aligns with expectations, with headline inflation at 3.1% and core and services measures remaining unchanged. They suggest this outcome likely leads to an unchanged Bank Rate in September, but acknowledge that escalating energy prices and the Iran conflict could heighten inflation and intensify pressure for future tightening measures.
While today's figures match consensus, policymakers may face mounting pressure to tighten policy, particularly if the Iran conflict persists in fueling inflation. Despite today's data not being surprising, inflation remains above 3%, and analysts anticipate a further rise in coming months, likely spurring the Monetary Policy Committee to raise rates.
Additionally, upstream prices have proven softer than expected, with output prices up 0.7% month-over-month (compared to the 0.8% anticipated) and input prices rising 0.3% month-over-month (as opposed to the 0.5% increase expected). The absence of a rise in core and services inflation bolsters the likelihood of an unchanged Bank Rate decision from the BoE this week, following yesterday's mixed labor market report.
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