The main message today is one of good newsDisinflation is on track and ahead of schedule compared to what we expected in NovemberNot currently facing a situation in which monetary policy is being hit by big new shocksThe risk from greater inflation persistence has become less pronouncedUpside risk to inflation has continued to diminishFor every rate cut, how much further to go becomes a closer callThere should be scope for some further easing if outlook evolves as we expect
His opening remarks fit with the message from the statement decision and summary earlier. It’s obvious there is a slight dovish tilt but whether or not they can deliver on that, we shall see. Bailey is trying to say that they might be in a position to cut again in April at the earliest but it is subject to their assumptions and forecasts playing out.
The Q&A session:
Need to see more evidence that we are going to get sustainable return to inflation targetWe have to be very focused on underlying inflation storyOptimistic about inflation outlookWe expect inflation to move down in the next releaseFalling inflation should feed into expectations; that should give me more confidence on the outlookWill not endorse 3.25% as terminal rate but market curve is reasonable
He’s not adding too much colour in responding to questions, also avoiding to comment about anything with regards to how US politics is affecting their policy setting and outlook.
The key takeaway here is that they are setting up an angle to cut rates sooner rather than later but won’t pre-commit to any date specifically. For now, he’s not refuting the potential for a move in April next. So, that is what markets are likely to stick with until something changes in their communication or on data developments.