Going into the report, traders were pricing in a relative coin flip for the BOE meeting in August. And with the headline, core, and services estimates all coming in unchanged, it’s hard to see a meaningful shift in the odds in the aftermath.
The disinflation process is gradually playing out and central banks are now referring to these stalling numbers as “bumps in the road”. So, are they confident enough to act on that and walk the talk? It remains to be seen. In the case of the BOE, they have made emphasis that they would like the stickier parts i.e. services inflation to ease a little more.
So, it’s still a bit of a guessing game in figuring out what they might want to do next month. For the pound, that means the landscape has not changed in a significant way compared to before the UK CPI report today.
