MNI BOE Review - May 2024: June Cut Increasingly Likely

• An extra sentence was added to the guidance adding further focus to data dependency.
• There was a deemphasis on labour market data – with the focus now firmly on inflation persistence. However, wage data is only less important than CPI if less costs are passed through. So subcomponents of the PMI data as well as the Agents' survey have increased further in importance.
• Medium-term forecasts point to markets not pricing enough cuts while near-term inflation and wage forecasts raise the bar for upside surprises.
• In addition, Ramsden joined Dhingra voting for an immediate cut - making a 7-2 vote split.
• The MNI Markets team now assign around a 50% probability of a June cut see a 40% probability of an August cut and see a 10% probability that rate cuts are delayed further. Prior to the May meeting we had looked for a 10% probability of a May cut, a 30% probability of June, 40% probability of August and 20% probability of a delay beyond August.

MNI BoE Review - May24.pdf