- Pricing partly reflects global factors.
- Not all market pricing focused on UK.
- I am more concerned about supply side.
- Exchange rates haven't gone as theory suggests.
- A falling dollar would be disinflationary for UK.
- Too early to say where dust will settle on dollar strength.
- There is no sign of shakeout in labour market yet.
- UK wage growth remains pretty high.
- Services points to inflation persistence.
- I am more worried about services inflation than wages.
- Tariffs are more of a disinflationary risk.
- Rise in inflation expectations worrisome.
- Neutral rate is higher than where it was.
- 3.25-3.50% neutral rate is not unreasonable.
The market is pricing 87 bps of easing by year-end and 99% probability of a 25 bps cut at the upcoming BoE meeting. The market's pricing was of course driven by the US tariffs announcement and the following global market rout.
BoE's Greene
