- Inflation had fallen more rapidly than what was expected a year ago
- There are a number of potential paths ahead
- But the base case scenario implied is that BOE would stick with more “gradual” rate cuts
- This central view means BOE would have to “lean in a bit harder” to keep disinflation process on track
- Full transcript (may be gated)
That is more than what markets are pricing in for next year but it is perhaps looking too far ahead. As things stand, markets are confident about two rate cuts by the BOE by the time we get to the May meeting. For 2025 as a whole, there’s a total of ~80 bps of rate cuts priced in now. At the end of the day, we’ll have to see where the data takes us. And that will be the guide for markets in which traders will be acting upon.
This article was written by Justin Low at www.forexlive.com. Source