24 Sep 2013
Flash: Reasons UK rates are heading higher - Societe Generale
FXstreet.com (Barcelona) - Kit Juckes, Head of FX at Societe Generale, explain in a note to clients, the sense that inflation in the UK, which he expects to keep pressing higher, has more to do with population growth than QE, ZIRP, or the jobless rate.
Key Quotes
"Strong population growth will make for a more sustainable demand-led recovery than you think. People who move to the UK need places to live, things to put in places to live, food, transport and utilities."
"The chancs that the inflation rate will trend down towards the slower rate of wage growth are fading."
"MPC can forward guide to its heart's content but pressure for rate hikes will grow. When David Miles stops voting for easing, the game is up."
"Upward pressure on accommodation costs have historically been a major factor in causing UK interest rates to be higher than those in the US or Europe and the pound to be permanently overvalued on PPP-stye metrics
Key Quotes
"Strong population growth will make for a more sustainable demand-led recovery than you think. People who move to the UK need places to live, things to put in places to live, food, transport and utilities."
"The chancs that the inflation rate will trend down towards the slower rate of wage growth are fading."
"MPC can forward guide to its heart's content but pressure for rate hikes will grow. When David Miles stops voting for easing, the game is up."
"Upward pressure on accommodation costs have historically been a major factor in causing UK interest rates to be higher than those in the US or Europe and the pound to be permanently overvalued on PPP-stye metrics