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Breeden says she is more focused on service inflation than wage growth

BOE
  • Breeden says this morning's growth figures "were great in confirming the short and shallow recession is behind us".
  • She says in the May MPR forecasts show inflation falling with "little new, particularly with respect to the shocks of the past". She says "no news is good news."
  • Breeden says "What I am particularly focused on now is price inflation for services rather than wages. That's because we have been hearing from businesses around the country that it will be harder to pass through price increases this year than last year,.. If that turns out to be true, that's really good news for everybody because that means interest rates can be reduced."
  • MNI VIEW: It's interesting that she picked up on service inflation being much more important than wage growth now - that's in line with the messaging that we say yesterday - and the MNI Markets team now thinks that the PMI data (showing whether cost prices are passed through or not) are actually more important to whether we see a first cut in June or not than wage data.
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