August 22, 2024 at 12:35PM
Medium-term outlook had not changed overall relative to June meeting
Short-term outlook has become somewhat more “stagflationary”
But weaker activity is likely to dampen inflation over time
Economic balance remains lopsided, mostly still driven by services activity
Labour market remains tight
The persistence in services inflation remains the central element shaping the inflation outlook
Inflation could turn out higher than anticipated if wages increased by more than expected
Monetary policy transmission was unfolding according to expectations
Extensive new data will be available by the time September meeting takes place
The meeting is seen as a good time to re-evaluate the level of monetary policy restriction
But should be approached with an open mind, which also implies data dependence
Full accounts
They still have about three weeks to guide markets the other way if they so choose not to cut again next month. But given the balance of probabilities and the prevailing language at the moment, a 25 bps rate cut is pretty much locked in.
This article was written by Justin Low at www.forexlive.com.
