BoE likely to keep the bank rate unchanged

The Bank of England (BoE) is expected to keep the bank rate at 0.5% at its meeting on 11 May. Headline CPI inflation remained flat at 0.0% in March, a historic low. 

Core CPI eased further, to 1.0% y/y, primarily reflecting the indirect effect of lower oil prices, which appears with a few months lag. 

Monetary Policy Committee (MPC) members have been silent recently due to the pre-general election purdah. 

Given the recent rise of oil prices, inflation is likely to pick up quickly in the coming months, in line with 2015 average forecast of 0.7% y/y. 

The MPC is awaiting signs of sustained wage growth to feel comfortable about a first rate hike.