• 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.