- 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%.
