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Economists polled by Reuters had been expecting the May reading to come in at 2%, which is the European Central Bank’s target.

The Party for Freedom won a landslide victory in the Netherlands’ general election in 2023.

• Key factors for May rate decision were domestic, not tariffs.
• We have not seen particular inflation surprises.
• Labour market has loosened somewhat.
• Pay growth is above levels consistent with a 2% inflation target but lower than expected in February.
• Path of slowing pay growth is intact.
• I was undecided ahead of May policy decision.

The UK continues to have the highest core inflation rate among the major economies.

• I will not make any prediction about June rate decision.

They will hold rates steady of course and this is also what the market fully expects.

• Path for rates remains downwards.
• How far and how quickly rates will fall is shrouded in a lot more uncertainty.
• Uncertainty reflects international situation.
• Impact of fragmented global trade is negative for global growth.
• Uncertainty will delay UK businesses investment decisions.
• Impact on prices is ambiguous.
• We are not seeing the same impact on supply chains and inflation we did in 2021.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Voted to hold rates unchanged in May as labour market not loosened as expected.
• Services price inflation above what I view as consistent with getting CPI back to target.
• My switch in vote from a 50 bps cut to a hold reflected spillover from financial market volatility.
• It’s better to make bolder moves on rates than hold for longer.
• Need to be concerned that inflation at 4% could alter wage and price setting dynamics.

As a reminder, Mann surprisingly voted for a 50 bps cut in February because she saw downside risks to employment but at the most recent decision she changed her mind and voted for keeping rates steady (the BoE cut rates by 25 bps).

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Disinflation process has continued.
• All MPC agree on disinflation, I see greater downside risks.
• Supply chain data points more clearly to disinflation than noisy wage data.

Core inflation stalled around 3.2% and it’s now back up to 3.8% but they are saying that disinflation has continued. Go figure…

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Economy moving gradually into excess supply
• Future policy decisions require certainty that inflation is on track
• Tariffs expected to have small impact on UK economy
• Slack opening up in labour market will guide policy
• Thought there was a case to cut bank rate in May even without tariffs hit

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

Eurozone inflation dipped back below the ECB’s 2% target for the first time since September 2024. Headline CPI fell from 2.2% yoy to 1.9% yoy in May, undershooting expectations of 2.0%. Core CPI (ex-energy, food, alcohol & tobacco) also eased more than forecast to 2.3% from 2.7%. The disinflation was led by a sharp slowdown […]

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