BoE raises Bank Rate by 50bps to 5.00%, larger than consensus of 25bps. The decision was made by 7-2 vote, with only known dove Swati Dhingra and Silvana Tenreyro voted for no change again.
Tightening bias is maintained as the central bank noted, “if there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.”
BoE continues to expect CPI to “fall significantly further during the course of the year”. Services CPI is projected to “remain broadly unchanged in the near term”. Meanwhile, core goods CPI is expected to “decline later this year”.
Second-round effects in domestic price and wage developments are “likely to take longer to unwind than they did to emerge”. There has been “significant upside news in recent data that indicates more persistence in the inflation process.”