The monetary policy committee left the benchmark rate unchanged on Wednesday, ending a run of speculation that a cut would arrive before the end of the quarter. The decision was not unanimous, and the language on the next review was noticeably softer than in June.
Headline inflation has now fallen for five consecutive months. What surprised the analysts we spoke to was the decision to keep guidance open rather than commit to a path, leaving room to move in either direction at the October review.
Food prices contributed most of the disinflation in the last two prints, and food prices are the component the committee trusts least as a signal. Core inflation, stripped of food and energy, has moved far less.
Two things have to happen before a cut. The energy tariff schedule has to land without a large upward revision, and the food index has to hold its level through the next harvest cycle rather than rebound.
Bond yields barely moved. Equities gave up early gains and closed close to flat, which analysts read as a market that had already priced a hold and was listening for the guidance instead.