UK: Post BoE, Q3 GDP will be the key data point - RBS

Ross Walker, Research Analyst at RBS, notes that the BoE’s September MPC Minutes reiterated that a majority of members expected to lower Bank Rate if the economic outlook was judged to remain ‘broadly consistent’ with that set out in the August Inflation Report.

Key Quotes

We believe the key data point will be the preliminary estimate of Q3 GDP, to be published on 30m September. Any data which feed directly into this estimate (services, industrial and construction output) or indicators which provide further guidance for Q3 GDP (eg, the services PMI survey) are, in our view, the key ones to watch.

By contrast, measures of inflation have become less important – at least barring any significant upside shocks, especially to the Core CPI rate (as that might be regarded as indicative of an increase in underlying price pressures). In general, corporate activity indicators will be more important than consumer ones as this is where the MPC expects the Brexit shock to materialise first (any deterioration in consumer demand is more likely to be apparent in 2017 as inflation spikes higher, wage inflation is subject to a more prolonged squeeze and unemployment rises).”