Going into Thursday\u2019s Bank of England decision, there was a sense that data this week \u2013 weak jobs, rapidly falling wage growth and lower inflation \u2013 would unlock a more dovish message from officials.<\/p>\n
That doesn\u2019t seem to have been the case. The Bank, while cutting rates down to 3.75% as widely expected, did concede that upside risks to inflation look \u201cless pronounced\u201d. But it also said that future decisions would become a \u201ccloser call\u201d \u2013 a nod to the fact that rates are getting closer to neutral. And while the Bank rarely tells us what neutral actually means in practice, it\u2019s generally assumed most officials think it\u2019s between 3-3.5%.<\/p>\n
What\u2019s also striking is how the lines have become more blurred between the doves and the hawks. In November, the dividing line was clear: the doves, worried increasingly by slack in the jobs market, wanted to crack on with rate cuts. The hawks all pointed to model evidence suggesting inflation is statistically more likely to stay higher for longer once it rises above 3%, together with the risk that rising inflation expectations would fuel a more persistent bout of price pressure.<\/p>\n
All of that is still largely true \u2013 five members, including Governor Andrew Bailey this time, voted for a cut, while the four hawks remained opposed. The committee is visibly divided.<\/p>\n
But in the meeting minutes, hawks and doves alike point to surveys which show wage growth expectations have levelled out in the 3.5-4% range in recent months. The implication is that actual wage growth, which has tumbled, may not have much further to fall. The Bank\u2019s own surveys of CFOs (Decision Maker Panel) will be released again in early January, and it is clearly going to be key.<\/p>\n","protected":false},"excerpt":{"rendered":"Going into Thursday\u2019s Bank of England decision, there was a sense that data this week \u2013 weak jobs,…\n","protected":false},"author":2,"featured_media":356501,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":{"0":"post-356500","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/356500","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=356500"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/356500\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/356501"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=356500"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=356500"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=356500"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}