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Bank of England sees little need to raise interest rates this year

Thursday, Feb 12 2015
Sterling was pushed higher after Bank of England in its Inflation Report said it expects stronger growth on the back of lower oil prices. However, it sees little need to raise interest rates this year and could even cut them if inflation proves weaker than expected, new forecasts showed on Thursday.
 
BoE Governor Mark Carney said he expected inflation to fall below zero in the coming months due to weak oil, but stressed that this by itself did not mean that the economy had entered deflation. Inflation would hit the Bank's 2 percent target in about two years' time, the Bank said, sooner than it forecast three months ago.
 
"(It is) appropriate to return inflation to target as quickly as possible after the effects of energy and food prices movements have abated," Carney said in remarks following the release of the Bank's forecasts. "The UK is not experiencing 'deflation'," Carney said in a letter to finance minister George Osborne explaining the difference between inflation - which stood at 0.5 percent in its most recent reading - and the Bank's 2 percent target.
 
After the report, Sterling break above 1.53 handle and is currently being traded around 1.5350 area. Pair is likely to find support at 1.53 and resistance above 1.5380 level. Later today, in the US session, Retail Sales and Unemployment Claims figures are scheduled for a release.
 
More in this category: « Aussie down after job figures US Retail Sales down by 0.8% »

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