Bailey Q&A: We need to see evidence of services inflation easing back

<ul><li>We need to see evidence of the most persistent elements of inflation, services inflation in particular, easing back</li><li>In terms of policy-setting, we need to look past short-term trends</li><li>Services inflation might be much stickier in the months ahead</li><li>Hopes lower inflation will influence expectations in the real economy</li><li>But we need to see more evidence of that</li><li>Inflation moving back to around 2.7% is not an acceptable level as a resting point</li><li>Needing to get inflation back to 2% mark is the best thing for households</li><li>We will not maintain policy stance any longer than we need to</li></ul><p>Following his remarks, the odds of a May rate cut have dwindled to ~45% now with traders even paring back odds of a June rate cut. The latter now has odds of ~96% after having been fully priced in before the BOE decision.</p>

This article was written by Justin Low at www.forexlive.com.