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Speaker 1: Bloomberg Audio Studios, podcasts, radio News. You were surprisingly close

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Speaker 1: to a Holt. Can you explain that?

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Speaker 2: Well, I wouldn't say Holt, I would say I was

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Speaker 2: much more balanced. Well, I was balanced going into it

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Speaker 2: from at the end of the last meeting, thinking well,

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Speaker 2: I'm really open minded for the next round and we'll

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Speaker 2: see what happens. So I think, you know, my mind

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Speaker 2: was certainly open at that point as to where we

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Speaker 2: would go next.

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Speaker 1: But the decision could have gone to a hold this time.

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Speaker 1: So how should markets interpret that?

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Speaker 2: Well, I think market shinterpted is we're in a situation

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Speaker 2: where there are risks on both sides of this situation.

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Speaker 2: There are a risk that demand could be considerably weaker

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Speaker 2: than we expect it to be. That could pull down

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Speaker 2: on inflation. We would then need to put lower interest

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Speaker 2: rates than we're predicting. There's the risk on the other

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Speaker 2: side that this process of adjustment was removal of the

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Speaker 2: sort of persistence of the fects from the inflation we

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Speaker 2: had for years ago isn't going to materialize in the

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Speaker 2: way we think it is, And also that the supply

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Speaker 2: capacity of the economy remains more limited. We don't get

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Speaker 2: the sort of supply growth that even that we're thinking

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Speaker 2: we're going to get and that will cause inflation to

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Speaker 2: be higher. Now, I we did it in two parts.

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Speaker 2: We started with the sort of domestic situation and then

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Speaker 2: sort of in the sense, brought the tariff and trade

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Speaker 2: news into it. On the domestic situation, this is sort

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Speaker 2: of crucial to your question about sort of you know,

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Speaker 2: how near or how far were you from action. An

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Speaker 2: important part of the story is actually where particularly where

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Speaker 2: the pay story is going in this country. Is it

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Speaker 2: going to you know, it's it's higher clearly than consistent

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Speaker 2: at the target. Is it going to come down during

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Speaker 2: the course of this year? Are we starting to see

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Speaker 2: the sort of the signals And my conclusion sort of

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Speaker 2: pouring over the evidence and the last few weeks as

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Speaker 2: we went into this decision, is I can see enough

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Speaker 2: in there. Yeah, that I think we are begining to

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Speaker 2: see in the sort of higher frequency data that we

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Speaker 2: are seeing some scientific coming off, even though in the

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Speaker 2: official slower frequency data, actually you don't really see so

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Speaker 2: much of that at the.

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Speaker 1: Moment, Governor, I mean, Murgis are now almost ruling out

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Speaker 1: to move in June. Is that the right interpretation?

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Speaker 2: I suppose The only thing we can say in confidences

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Speaker 2: in the world we're in at the moment is that

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Speaker 2: a lot's going to happen in the next whatever it

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Speaker 2: is six weeks or so. I mean, it really is

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Speaker 2: going to happen. I mean a lot really is going

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Speaker 2: to happen. I suspect, So I have to be honest

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Speaker 2: with you again. You know, I'm very open minded about

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Speaker 2: every meeting is by the way, every meetings live for us.

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Speaker 2: That's our philosophy. It's it's not a shifting philosophy, that's

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Speaker 2: a permanent philosophy. So I'm very open minded about it,

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Speaker 2: frankly because I think we'll know a lot. We'll know

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Speaker 2: a lot both domestically and internationally. Well, there are a

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Speaker 2: lot more about pay actually, because there's a peak of

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Speaker 2: pay settlements that we will know more about because we're

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Speaker 2: sort of just going through that, and I think we

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Speaker 2: can probably guarantee we're going to know more internationally. Stuff

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Speaker 2: will happen.

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Speaker 1: How much uncertainty does the UK US trade deal actually

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Speaker 1: take off the table?

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Speaker 2: Well, I think it's obviously good news now. However, the

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Speaker 2: UK is the very open economy, so when we formed

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Speaker 2: our view, it's not just about the UK US bilateral

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Speaker 2: trade relationship. It's about how all the other relationships with

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Speaker 2: the world come back to the UK as it were

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Speaker 2: in terms of the openness of the UK. So I

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Speaker 2: really hope, because I do think this is very good

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Speaker 2: news on the UK US front. I hope it's the

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Speaker 2: first of many, because that's really what we need to see.

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Speaker 1: It is a trade deal with the EU. The bigger prize.

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Speaker 2: Well, it's important. I think China's very important as well, frankly,

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Speaker 2: but those are important.

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Speaker 1: Ones, Yes, which ones are more important US, China or UK?

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Speaker 1: You for the UN, I don't.

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Speaker 2: Actually have a rank, order to be honest with you.

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Speaker 2: I think it's it's because of the sort of the

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Speaker 2: sort of other fluctuation nature of the situation. We do

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Speaker 2: not have a sort of you know, a league table

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Speaker 2: of importance in that sense.

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Speaker 1: How big would the growth downgrade had been if not

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Speaker 1: for the looser financial conditions?

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Speaker 2: Well, yeah, okay, it's a slightly hypopoctical question obviously, because

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Speaker 2: they did move. Obviously, our sort of taking a part

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Speaker 2: of the of the components would have suggested that the

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Speaker 2: impact of the world on growth next year and actually

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Speaker 2: is not a bad place to lock Actually would have

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Speaker 2: been about point three. I think something like that without

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Speaker 2: then and of offsetting effects of financial markets, and so.

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Speaker 1: Again going forward, given all the uncertainty, do you you know,

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Speaker 1: what does it mean for cuts? How should market interpret

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Speaker 1: what we're seeing in you know, longer term?

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Speaker 2: So I think the path is still gradually and carefully downwards.

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Speaker 2: I don't think that that path is done. A lot

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Speaker 2: will depend also, of course, on the say, on these

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Speaker 2: important domestic developments. But I'm not going to make predictions

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Speaker 2: about you know, how quickly how much, because there is say,

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Speaker 2: there is so much now in a sense that we're

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Speaker 2: going to learn in the next in the coming in

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Speaker 2: the coming time. But I do think the underlying path

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Speaker 2: is down as we are going to get a bit

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Speaker 2: of a bit of a bump up in inflation. I'm

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Speaker 2: afraid we know that it's going to be in the

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Speaker 2: next release because it's it's in these sort of so

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Speaker 2: called administered prices, which we already know. But our view

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Speaker 2: is it's not it's nothing like what we what we

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Speaker 2: saw a few years ago. And we do think in

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Speaker 2: the current situation, you know, it's reasonable to look through

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Speaker 2: that does.

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Speaker 1: A terminal rate at three and a half percent sound reasonable.

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Speaker 2: Well, again, I think judgments on the terminal rate and

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Speaker 2: conditions of uncertainty like this are frankly, you know, quite

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Speaker 2: quite heroic at times. Obviously the market makes those judgments.

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Speaker 2: Market has to make those judgments. Uh, you've seen the

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Speaker 2: profile that we've published today with inflation based on that

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Speaker 2: market profile, and it doesn't look an unreasonable one.

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Speaker 1: Going forward to how concerned are you about the surgeon pound?

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Speaker 1: Does that have any impact on.

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Speaker 2: How much the word surging is is quite dramatic because

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Speaker 2: Stirling has been a little bit sort of in the middle. Actually,

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Speaker 2: so you've had obviously we've obviously we've appreciated against the dollar,

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Speaker 2: but we've depreciated against some other currencies, so we've relative

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Speaker 2: to some others, we've been somewhat in the middle. Actually again, yeah,

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Speaker 2: we factor it into our our forecast. I think we

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Speaker 2: also have to look at it quite carefully as to

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Speaker 2: why is it searching? Because I'm not sure that just

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Speaker 2: apploying the usual theory of interest parity you know, tells

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Speaker 2: you all the story. In fact, it doesn't touch it

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Speaker 2: because our staff do a lot of work to sort

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Speaker 2: of pick the bones apart, and they'll tell you actually

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Speaker 2: that's not really, that's not really the story. So I

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Speaker 2: think it's more going on than just that story. So

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Speaker 2: again we have to look at you, what degree I

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Speaker 2: sort of risk Premiu coming into the into the market

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Speaker 2: in that sense,