BOE unlikely to cut rates on Defaltion – Goldman Sachs

FXStreet (Mumbai) - The investment bank Goldman Sachs believes the Bank of England (BOE) is unlikely to cut the interest rates to battle deflation, while stating that the BOE will most likely push back the time they do raise.

Off-late many BOE members, including BOE economist Haldane said that the banks could be forced to cut rates in order to battle deflation. However, Goldman Sachs believes the BOE would be comfortable, so long as the deflation is being imported and the domestic prices are not a big concern.

The investment bank further states that BOE chosed to stay pat for more than four years when the inflation ran above the target and thus, the central bank could do the same now with inflation running below target as long as the domestic price pressures do not fall as rapidly as import prices.

Goldman Sachs also stated that there's very little risk in the BOE changing rates in the run up to the election.