BOE’s QIR to be of prime focus today – TDS

FXStreet (Barcelona) - Analysts at TD Securities view the Bank of England’s QIR to be the primary focus for today and see the BoE’s 2-year ahead inflation forecast to be the key metric.

Key Quotes

“We know that the next year or so of inflation is due to be revised much lower, but what matters for monetary policy is where inflation is forecast to be 2-3 years ahead, and the BoE can use this forecast to signal how far in the future rate hikes might be.”

“In August the MPC had forecast CPI of 1.8% two years forward, and any changes to the forecast will have to balance out much softer spot inflation and slightly slower growth with lower rates and a softer currency.”

“Our base case is for the MPC to leave the forecast in the 1.7-1.8% range, which will still be a dovish outcome with the downgrades to near-term CPI, but we do see some risk of an even more dovish scenario where the two-year ahead forecast is revised down to ≤1.6%, and markets push rate hikes back into 2016.”