FXStreet (Guatemala) – Analysts at Bank of Tokyo Mitsubishi explained that even with the current drop in crude oil prices, the base effect unwind in crude oil prices is set to push the UK annual inflation rate to around 1.0% in 1H 2016.
Key Quotes:
“The core annual rate is currently at 1.2% with the average during 2002-07 at 1.4%. We are not a million miles from what was an acceptable level of core inflation when the BOE was last actively tightening monetary policy.
Politically, we understand the difficulty of signalling to the UK population that rates are about to rise when inflation is close to zero percent. By Q1 next year, that constraint should not be as powerful.”
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