Mike Ingram, Strategist at BGC Partners, comments on the UK inflation, Rate hike scenario and shares the outlook for the Footsie.
Ingram explains that the UK economy sees very little core inflation in the pipeline to push CPI up. Food deflation remains a concern, but wages are picking up.
The Oil slump seen in the 2nd half of last year will drop out of the equation, and inflation might rise into 2016 due to the base effect.
Although inflation is expected to pick up in 2016, Ingram believes that the Bank of England’s 2% inflation target is unreasonable, and won’t be achieved.
Productivity growth remains the key reason for his view.
European markets aren’t healthy and growth expectations have been playing spoilsport.
Growth was supposed to accelerate but it is seen dipping lower and due to this earnings growth in companies will remain lower. The earnings season is looking dim for Europe.
Bank of England might hike rates by early 2016
Ingram forecasts the Bank of England to start its rate hike plan between November 2015 – February 2016.
Outlook for the Footsie
Ingram sees FTSE back towards 7000 in the next 6 months and further comments that the earnings for the index remains worst when compared to any major market.