UK monthly inflation report and economic forecast may tell investors to expect an interest-rate hike sooner rather than later
The inflation report will be accompanied by the publication of Carney’s latest explanatory letter to the chancellor, George Osborne, after inflation slumped to zero, way below the 2% government target.
Economists say there is a high chance that Carney will use the latest forecasts for growth and inflation to warn markets they are too relaxed about the timing of an interest rate hike and that it will come sooner than traders are pricing in. That would echo minutes to its April monetary policy committee (MPC) meeting published mid-month, the only real news from the Bank in recent weeks.
If policymakers are of the same mindset now, they may want to send a message to markets and could conclude that inflation will overshoot the Bank’s target in two to three years’ time