UK CPI reaches five year high
- AUD - Monetary Policy Meeting Minutes
- GBP - CPI y/y: 3.0%
- GBP - BOE Gov Carney Speaks
UK CPI met expectations this morning, posting 3% YOY, the highest rate in more than five years. The rise was boosted by the increasing costs of food and transport, as well as the rising import costs caused by the weak pound. The reading shows inflation as a percent over the Bank of England’s target of 2%, and will mean BOE Governor, Mark Carney, will now need to write a public letter to the Chancellor of the Exchequer explaining why inflation is at its current level. The figure will provide further support for a November rate hike.
Both BOE Governor, Mark Carney, and Deputy Governor, David Ramsden testified before the Treasury Select Committee this morning. Ramsden explained how Brexit is a key risk to the UK economy and will have negative impact on productivity growth. He also sees UK inflation topping the 3% level in October. Carney seconded this opinion. Carney also mentioned how a BOE rate hike in the coming months might be appropriate. Touching on Brexit, he mentioned how he is working on a contingency for a ‘hard exit’ but he ultimately expects there will be a transition deal. Sterling dropped on the back of the dovish comments.
Across the pond, the US will release the industrial production figure this afternoon, expected to post 0.3%. FOMC member Patrick Harker will be speaking about ‘the role of transportation in fostering inclusive regional economic growth.’ In Canada, Bank of Canada Senior Deputy Governor Carolyn Wilkins will be participating in a panel discuss titled ‘Blockchain and payments: lessons learnt and future prospects’ at the Sibos conference.