BoE held its Bank Rate steady at 4.75%, in line with expectations, but the vote leaned more dovish than before. Three MPC members—Swati Dhingra, Dave Ramsden, and Alan Taylor—voted for a rate cut.
BoE reaffirmed that a “gradual approach to removing monetary policy restraint remains appropriate” and emphasized the need to maintain restrictive policy “for sufficiently long” to ensure inflation sustainably returns to 2% target. Decisions on the degree of restrictiveness will be made on a meeting-by-meeting basi.
The statement acknowledged that headline CPI inflation rose to 2.6% in November, slightly above prior expectations, while services inflation remained persistently high. Inflation is expected to rise slightly in the near term.
Meanwhile, indicators of near-term activity have weakened, and staff now expect GDP growth to fall short of projections from the November Monetary Policy Report, although the labor market is seen as broadly balanced.
BoE also flagged uncertainties arising from global inflationary shocks, geopolitical risks, trade policy developments, and measures in the Autumn Budget, all of which could impact growth and inflation.
