February 18, 2025 at 04:33AM
It is clear that high rates have worked
But we cannot declare victory on inflation yet
Further rate cuts implied by the market are not guaranteed
We cannot get too ahead of ourselves on rates
It was a difficult decision, there was argument on both sides
There was an active debate on this but the better decision was to ease a little bit of the restrictiveness
That is in recognition that we are making progress to our goal
We are still restrictive, waiting for more evidence on inflation progress before moving again
We need to continue to see easing wage costs, disinflation in services, and reduction in housing prices
Need to see some recovery on the supply side of the economy
This is a small rate cut but every little bit helps
Well, it took them long enough to finally deliver. But Bullock is making clear that this doesn’t mean that they are going to keep cutting at every meeting. As such, it’s still all about the data more than anything else at this stage. At present, traders are still pricing in ~44 bps of rate cuts for the remainder of the year. The next rate cut is fully priced for July but May isn’t out of the picture either, with odds on the latter at ~81%.
This article was written by Justin Low at www.forexlive.com.
