UK May CPI held at 2.8% YoY, matching April and below economists' 3.0% forecast,
in data released Wednesday one day before the Bank of England's policy decision.
Inflation remains roughly 1 percentage point above the BoE's January projection;
in April the Bank warned headline CPI could exceed 3.5% by year-end and, in the
three worst-case scenarios, top 6% in early next year. Markets were relieved
this week by an apparent US-Iran agreement that could reopen the Strait of
Hormuz; the UK, as a major importer of gas, is more exposed to the conflict than
most Western peers. Economists expect the BoE MPC to hold Bank Rate at 3.75%
this month by a 7-2 vote.
