February 18, 2025 at 05:04AM
As we are still in restrictive territory, that is still exerting downwards pressure on inflation
We didn’t go as high (on rates) as other countries, so they’ve had to cut quite quickly
We can still possibly cut but we may not have quite as much room to go because we didn’t go as high in the first place
We want to see more information on inflation and labour market before what we do next
We are trying to find a balance here, we’re in the “narrow path”
The aim is to get inflation back to the middle of the 2% to 3% target band
The market has more confidence than I do on what path will deliver us sustainably back to the middle of the target band
However, I don’t share that same confidence yet
She is consistent in her communique here. Once again, just reaffirming that policy remains restrictive and that they’re not pre-committing to anything in April. And also, she’s mentioning again that the market pricing for ~44 bps more rate cuts this year is not something they’re envisioning yet. Well, I guess we’ll have to wait and let the data decide now who’s right and who needs to play catch up.
This article was written by Justin Low at www.forexlive.com.
