Better-than-expected UK inflation not enough for a September cut
STOXX 600 up 0.3%
U.S. futures flat
UBS shares up 2% after results
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BETTER-THAN EXPECTED UK INFLATION NOT ENOUGH FOR SEPTEMBER CUT
Welcome news came this morning for those hoping for another Bank of England rate cut, as data showed UK inflation rising less than expected in July. But the BoE's next meeting in September feels too soon for most.
As of 0900 GMT, traders saw around a 60% chance the Bank of England will leave rates unchanged on Sept 19.
"Given the razor thin margin of the vote to ease policy earlier this month, a cut in September might be a step too soon, but a 25bp reduction in the Bank rate to 4.75% in November looks odds on," wrote Investec chief economist Philip Shaw.
The nine-strong MPC voted 5-4 for a rate cut at its last meeting earlier this month.
RBC economists are also of the opinion that a rate cut will come in November, as is the team at BMO Capital Markets.
However, Wednesday's data does mean a September cut isn't entirely off the table.
"With one more set of wage and inflation prints due before the (monetary policy committee) delivers its September rate decision, this week’s data is unlikely to be conclusive for policymakers," said Nick Rees, FX market analyst at Monex Europe.
"Nevertheless, we are still inclined to think that these latest figures help support the MPC’s argument that inflation pressures are gradually easing, opening the door for further rate cuts. All in all, we think a September rate cut remains an underpriced scenario."
(Lucy Raitano)
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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS
AND HAPPY AS THE SCREENS WERE GREEN CLICK HERE
COOLER-THAN-EXPECTED BRITISH INFLATION DATA BOOSTS THE MOOD CLICK HERE
MORNING BID: WELCOME TO THE CUTTING CLUB KIWIS CLICK HERE
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