- Policy outlook has not changed substantially since March
- There has been little news in recent months on inflation persistence
- Now seeing signs of a downward shift in the persistent component of inflation dynamic
- A cut in the bank rate would not entirely undo the restrictive policy stance
- Will need to maintain a degree of restrictiveness in policy stance to squeeze out inflation persistency
- Absence of news and passage of time have brought a bank rate cut somewhat closer
This is pretty much the step before the step to cut rates. As such, the language is angling towards a move in the next few months. As for market pricing, a move in June is ~51% priced in. Meanwhile, an August move is ~98% priced in after the PMI data today.
