Bailey
- There is more demand pressure in the US
- I see strong evidence that process of disinflation is working its way through
He's touched on a key puzzle in markets that Goldman Sachs also wrote about earlier. The question is: Why? Is it 30-year fixed mortgages? Is it running a deficit at 7% of GDP? Is it something else in the US?
The answers to those questions tell you if it's a long-term problem or one that will work itself out with a few more months of high rates.
However I wouldn't look to Bailey for those answers as up until very recently he was arguing that UK inflation dynamics (hotter) were different than the US and Europe.
