With the minutes suggesting little desire for a rate hike, and a lower than previously expected inflation path.

Inflation is being driven in the UK by weak sterling, recently announced fiscal stimulus and a stronger than expected domestic economy. We see less obvious sources, such as recent data out of China and the OPEC oil agreement, as posing further upside risk to the BoE expected inflation path.

Chinese trade data, which was expected to print in negative territory, surprised the market this month as imports grew by 13% and exports by nearly 6%. This was followed by an upside surprise in Chinese retail sales data and in Producer Price Index  inflation, which showed a 3.3% increase in producer prices. As the second largest importing nation into the UK, we see the latter as likely to have a lagged impact on UK inflation.

A further source of inflationary pressure comes from the rising oil price which looks to have continued its momentum on the back of the recent OPEC agreement to cut production. With year-on-year lows still to be felt we can expect higher oil prices to continue to positively contribu te to the headline Consumer Price Index  inflation figure.

Inflationary pressures which are likely to continue to impact into 2017 and a seemingly hawkish tilt to the Fed following their recent rate rise, means that the MPC may need to have more conversation around following their American peers in upcoming meetings.

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