UK: Inflation overshot expectations in February - ANZ

According to the analysts at ANZ, UK inflation overshot expectations in February coming in at 2.3% y/y (exp. 2.1% y/y) while the BoE expects inflation to peak around 2.75% early next year.

Key Quotes

“February core inflation rose 2.0% y/y, up from 1.6% y/y in January. That would suggest that sterling's weakness is feeding through into underlying price pressures. The BoE has said that it will tolerate inflation overshooting for a period of time, but that there are limits. It has also said that if aggregate demand performs stronger than expected, interest rates may have to rise sooner. Retail sales tonight will be important and sterling is trading well into the Article 50 announcement next Wednesday.”