Remarks of Officials

If inflation continues to fall broadly in line with our expectations, there is a case for a further cut in the policy rate.

The Bank of Canada lowered its policy rate by 25 basis points to 4.5% for the second consecutive month and indicated that further rate cuts may be considered if inflation continues to cool as expected.

ECB President Christine Lagarde made no pre-commitment to the path of interest rates, saying that data are needed to provide greater certainty. Meanwhile, Europe's labour market continues to show surprising resilience, meaning that the central bank can wait for the best time to cut rates.

The European Central Bank (ECB) on Thursday decided to keep the three key ECB interest rates unchanged, in line with market expectations, continuing to emphasize that a decision on further rate cuts would be dependent on upcoming economic data releases, particularly on inflation. It also left the door open for a potential rate cut in September.

Fed Governor Adriana Kugler delivered a speech on July 16 titled The Challenges Facing Economic Measurement and Creative Solutions, with the main content as follows. With inflation, an important component to track recently has been housing services costs, which are typically the single largest expen

What I have seen so far appears to be consistent with a soft landing: Inflation has fallen significantly from its peak, and the labor market has gradually cooled but remains strong. My baseline forecast is that inflation will continue to move toward target over time, without much further rise in unemployment.

There are signs that inflation persistence will ease in line with the fall in capacity pressures and business pricing intentions. The Committee is confident that inflation will return to within its 1-3 percent target range over the second half of 2024.

It is not advisable to cut rates until we gain greater confidence that inflation is sustainably moving toward 2%.

The wage-price system in the UK has been subject to a sequence of enormous shocks over recent years. The playing out of those shocks through the economy, and the continued tight and impaired labour market, means that inflation will remain above target for quite some time. Haskel would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably.