Gilts Tick Higher As BoE's Bailey Comments On Inflation Forecasts

Gilt and Sonia futures have ticked up slightly as BoE Gov Bailey makes comments on "Inflation and the Economy". The event is media-only but a few headlines have crossed, with the limited market movement mostly reflecting the fact he's relaying views he's expressed before:

• Regarding today's surprisingly high inflation print - notes that they showed a welcome fall below double-digits. Says the BoE's projections show the gov't will meet its inflation target this year; but won't speculate on where April inflation data leaves the BoE's forecasts.
• Says that the focus has to be on food and core inflation; BoE will be watching the data for future rate decisions.
• Says that he doesn't think "spiral" is the right word to use re core inflation and wages.

• A: The forecasting is an organisational framework need to have a degree of consistency. Right that its not a good era for forecasting with a number of shocks. Still need forecast to organise the views on the MPC but have to be careful not to overly rely on them. All forecasts are conditional on market prices, asset prices, commodities, govt policies. Even commodity prices now are 10% lower now than when May forecasts were made.
• Also inflation is much more persistent, partly due to labour and firms holding on to workers as its so hard to recruit people.