Iran Deal Takes Bank of England Rate Hike Off Table
A revived Iran nuclear deal could keep UK inflation below 4% by restarting oil flows, allowing the Bank of England to skip a summer rate hike. A 7-2 vote in favor of no change is expected.
According to the source, a sustained Iran nuclear deal would allow oil exports to resume, lowering global prices and keeping UK inflation under 4%. This removes the urgency for the Bank of England to raise rates this summer.
The Monetary Policy Committee is expected to vote 7-2 in favor of holding the base rate steady at its next meeting. The dovish outlook is driven by reduced inflationary pressure from cheaper energy imports.
If the deal collapses, inflation risks could re-emerge, but for now the market is pricing in a prolonged pause.
Source: FXStreet Forex News