• Policy outlook has not changed substantially since March
• There has been little news in recent months on inflation persistence
• Now seeing signs of a downward shift in the persistent component of inflation dynamic
• A cut in the bank rate would not entirely undo the restrictive policy stance
• Will need to maintain a degree of restrictiveness in policy stance to squeeze out inflation persistency
• Absence of news and passage of time have brought a bank rate cut somewhat closer

This is pretty much the step before the step to cut rates. As such, the language is angling towards a move in the next few months. As for market pricing, a move in June is ~51% priced in. Meanwhile, an August move is ~98% priced in after the PMI data today.

This article was written by Justin Low at www.forexlive.com.