Bailey Q&A: We need to see evidence of services inflation easing back
We need to see evidence of the most persistent elements of inflation, services inflation in particular, easing backIn terms of policy-setting, we need to look past short-term trendsServices inflation might be much stickier in the months aheadHopes lower inflation will influence expectations in the real economyBut we need to see more evidence of thatInflation moving back to around 2.7% is not an acceptable level as a resting pointNeeding to get inflation back to 2% mark is the best thing for householdsWe will not maintain policy stance any longer than we need toFollowing his remarks, the odds of a May rate cut have dwindled to ~45% now with traders even paring back odds of a June rate cut. The latter now has odds of ~96% after having been fully priced in before the BOE decision. This article was written by Justin Low at www.forexlive.com.
- We need to see evidence of the most persistent elements of inflation, services inflation in particular, easing back
- In terms of policy-setting, we need to look past short-term trends
- Services inflation might be much stickier in the months ahead
- Hopes lower inflation will influence expectations in the real economy
- But we need to see more evidence of that
- Inflation moving back to around 2.7% is not an acceptable level as a resting point
- Needing to get inflation back to 2% mark is the best thing for households
- We will not maintain policy stance any longer than we need to
Following his remarks, the odds of a May rate cut have dwindled to ~45% now with traders even paring back odds of a June rate cut. The latter now has odds of ~96% after having been fully priced in before the BOE decision.
