- As we are still in restrictive territory, that is still exerting downwards pressure on inflation
- We didn’t go as high (on rates) as other countries, so they’ve had to cut quite quickly
- We can still possibly cut but we may not have quite as much room to go because we didn’t go as high in the first place
- We want to see more information on inflation and labour market before what we do next
- We are trying to find a balance here, we’re in the “narrow path”
- The aim is to get inflation back to the middle of the 2% to 3% target band
- The market has more confidence than I do on what path will deliver us sustainably back to the middle of the target band
- However, I don’t share that same confidence yet
She is consistent in her communique here. Once again, just reaffirming that policy remains restrictive and that they’re not pre-committing to anything in April. And also, she’s mentioning again that the market pricing for ~44 bps more rate cuts this year is not something they’re envisioning yet. Well, I guess we’ll have to wait and let the data decide now who’s right and who needs to play catch up.
This article was written by Justin Low at www.forexlive.com.
