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Anglo inflation

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  • Another Bank of England member (the normally dovish Miles) has been giving clear signals of a rate hike this year in the UK. It seems the Bank may be unusually united on this point. UK inflation is due, with the consensus looking for 1.7% yoy.
  • US inflation is also due for release - we forecast 0.2% core and 0.3% headline (mom terms). We see rising inflation pressures this year, and it is worth noting that after so long a period of benign inflation when prices do rise, many are likely to gap up 3% to 5%.
  • The IMF yesterday cut its US and global growth estimates, though this is simply a process of catching up with the market consensus (it has been lagging the private sector woefully). The IMF has no special insight or accuracy advantage relative to private sector forecasts.
  • Risk aversion is still an issue, with attention focusing on Iraq. The Euro area is offering first quarter labour costs, but it is not the aggregate figure that matters so much as the component economies' labour costs (relative changes impact competitiveness).

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