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How significant is "finely balanced" and is there now less data dependency? (2/2)

BOE

In addition to the paragraph above summarising the members' views who were "finely balanced", there is only one rather than two mentions of data in the final paragraph of the Monetary Policy Summary:

  • The line: "The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably" continues to refer to the data. The next sentence is then unchanged before the de-emphasis of data:
  • The May sentence of: "The Committee will consider forthcoming data releases and how these inform the assessment that the risks from inflation persistence are receding."
  • Has been replaced with "As part of the August forecast round, members of the Committee will consider all of the information available and how this affects the assessment that the risks from inflation persistence are receding."
  • Combined with the view of those members' whose views were "finely balanced" stating that "services price inflation relative to the May Report did not alter significantly the disinflationary trajectory that the economy was on" it now appears as though there is a lot less emphasis on individual data points here.
  • To us, this increases further the probability of an August cut - if data surprising to the upside is no longer enough to change the underlying view of inflation persistence - then it seems as though some MPC members almost are precommitting to a rate cut here.
  • As we noted earlier, however, Broadbent will leave the MPC at the end of this month - so if he was one of the three members noted by the BBC - Lombardelli would need to share the same view for a quorum to be reached.

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