- Before 5.25%
- Bank rate vote 7-0-2 vs. 8-0-1 expected (Dhingra and Ramsden voted for 25 basis point cut)
- CPI inflation expected to return close to the 2% target in the near term
- But it is expected to increase slightly in the second half of this year, due to the correction of base effects.
- Upside risks still weigh on the near-term inflation outlook due to geopolitical factors.
- The main indicators of inflation persistence are generally moderating as expected, although they remain high.
- Monetary policy will need to remain restrictive long enough to bring inflation back to the 2% target.
- Monetary policy should be restrictive for a prolonged period until the risk of inflation exceeding the 2% target dissipates.
- Ready to adjust monetary policy as justified by economic data to bring inflation back to the 2% target on a sustainable basis
- Will examine upcoming data releases and how these inform the assessment that risks from persistent inflation are diminishing.
- How long the discount rate should be maintained at its current level will remain under review.
- Full declaration
The only real addition to the forward guide passage is that highlighted in bold. Note that this particular addition only highlights the risks of “retreat” from the persistence of inflation. This is another step towards lower rates, but not a really big one.
Additionally, the discount rate vote also sees Ramsden join Dhingra in opting for a rate cut. So this is also a slightly more accommodating result.
The BOE also lowered its inflation forecasts, expecting inflation to be 2.6% in one year (previously 2.8%), 1.9% in two years (previously 2.3%) and 1. 6% in three years (previously 1.9%). .
Other than that, the rest of the language is as you would expect. Or at least I would put it that way. Sterling fell, however, perhaps with even the slightest accommodative measure that could help. GBP/USD is down at 1.2450 from around 1.2590 before the decision.
Bailey’s comments could also play a small role as he says recent inflation news has been “encouraging” and he is “optimistic that things are moving in the right direction.”
cnbctv18-forexlive
