U.K. Q4 unemployment rate likely at 5.5%

The BoE's MPC meeting and inflation report are due today. The inflation rate remained around zero in Q3, slight less than MPC's projection of 0.11% year on year. In the October minutes, the MPC said that "the near term outlook for CPI inflation appeared slightly weaker than at the time of the August Inflation Report ... it now appeared likely to remain below 1% until spring 2016." 

"In August, the committee had predicted inflation of 1.2% for Q1 2016 so that represents a material softening of view. Over the three months since the last report, the pound has fallen by about 1½% whereas the oil price has risen by over 4%", notes Societe Generale.

In the last week report published by ONS, the initial Q3 was expected at 0.5% qoq, analysts says the MPC is unlikely to revise the forecast. In addition to the inflation rate and GDP, the MPC will be focusing on unemployment rate. The unemployment rate has been reduced 5.4% in the previous month. The central bank expects the long term unemployment rate to remain around 5%. The August Report of MPC predicted an average of 5.6% for Q3 and 5.5% for Q4 so is likely to revise down the numbers for the next few quarters, notes SocGen.