Japan Services Producer Prices Rise 3.2% in June, Supporting BOJ Rate Hike Expectations 
Japan Economy Minister Downplays Inflation Risks Despite BOJ Warning 
RBA Signals More Rate Hikes Possible as Australia Battles Stubborn Inflation 
China Set to Hold Benchmark Lending Rates Steady for 15th Month 
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UK Office for National Statistics (ONS) earlier today released UK CPI data which showed that the headline figure ticked higher to 0.3% y/y from 0.2% in Dec. On monthly basis, the CPI dropped 0.8%, beating the estimate drop of 0.7%. However, core CPI inflation unexpectedly missed estimates to print at 1.2% from Dec's print of 1.4%.
Data reinforced the view that BoE will be in no hurry to hike rates. Recently BoE Governor Carney had said that the necessary conditions for the MPC to begin tightening policy are 1) above-trend GDP growth, 2) a pickup in unit labour costs and 3) continued firming of core inflation. The unexpected decline in UK core CPI inflation gives further support to BoE Governor Carney's view.
"We expect the first BoE rate hike in Q3, assuming that the status quo is maintained after an increasingly likely referendum on EU membership this summer. Risks to this call are obviously currently tilted towards a later liftoff date." said Nordea Bank in a research note.
