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  • At present, the MNI Markets team places more emphasis on the wage data than inflation data in determining when the MPC will reach quorum in its decision to implement the first cut.
  • For this reason, in the aftermath of last month’s labour market release we revised our expectation for the first BOE cut to see a 15% probability in May, 30% by June, a 40% probability by August and a 15% probability that the first cut is delayed even longer.
  • That sets the scene. In the data for the 3-months to January all six analyst previews that we read that specified their view for private regular AWE look for a 0.1ppt uptick to 6.3%Y/Y from 6.2%Y/Y in the 3-months to the end of December. We also flag the potential for upward revisions to previous months’ single month data (which we have seen in recent releases).
  • Unless we see some downward surprises to this data imminently in our view it makes it very difficult to see an easing of policy before the August meeting.
  • However, on the flip side, if we did see softer data for January with a downward revision to December data, we could see pricing for the first cut brought forward somewhat in our view.
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  • At present, the MNI Markets team places more emphasis on the wage data than inflation data in determining when the MPC will reach quorum in its decision to implement the first cut.
  • For this reason, in the aftermath of last month’s labour market release we revised our expectation for the first BOE cut to see a 15% probability in May, 30% by June, a 40% probability by August and a 15% probability that the first cut is delayed even longer.
  • That sets the scene. In the data for the 3-months to January all six analyst previews that we read that specified their view for private regular AWE look for a 0.1ppt uptick to 6.3%Y/Y from 6.2%Y/Y in the 3-months to the end of December. We also flag the potential for upward revisions to previous months’ single month data (which we have seen in recent releases).
  • Unless we see some downward surprises to this data imminently in our view it makes it very difficult to see an easing of policy before the August meeting.
  • However, on the flip side, if we did see softer data for January with a downward revision to December data, we could see pricing for the first cut brought forward somewhat in our view.