BOE head Bailey is speaking on the economy and says:
- Our projections show government will meet inflation target this year
- Will not speculate on where April inflation data leaves us in terms of forecasts (below the forecasts perhaps)
- Quite a lot of inflation is imported.
- Our commitment to bring inflation to target is absolute.
- Today’s numbers showed a welcome fall below double digits
- We have to focus on food and core inflation.
- Food inflation is taking longer to fall than was expected.
- Energy prices are contributing to food inflation.
- Producers have booked in higher costs for longer than usual.
- I don’t think “spiral” is the right word to use when asked about core inflation in wages.
- Inflation expectations are coming down.
- The question for us is how sticky and stubborn is the process down for inflation.
- We have a tight labor market
- This is not a good era for forecasting given the huge shocks in the global economy
In the UK today, inflation rates exceeded expectations, with year-on-year Consumer Price Index (CPI) at 8.7%, against a forecast of 8.2% and a previous of 10.1%. Core CPI , which excludes volatile goods such as energy and food, also rose more than expected at 6.8% y/y vs 6.2% expected. The Retail Price Index (RPI) year-on-year likewise outpaced forecasts, hitting 11.4% against the anticipated 11.1%. In terms of producer prices, the Producer Price Index (PPI) Input came in below expectations at -0.3% on a monthly basis, while PPI Output was flat at 0.0%. The House Price Index (HPI) y/y revealed an increase in UK housing prices by 4.1%, lower than the 5.2% forecast.
Credit Suisse raises its expectations for UK terminal rate to 5% (from 4.75% previously). They see hikes in June and August. Meanwhile, Bank of America sees 3 more hikes to 5.25%