The BoE delivered a widely expected 25bps rate cut, taking Bank Rate to 3.75%. However, the decision was accompanied by a surprisingly hawkish 5–4 vote split.
Supporters of the cut, led by Governor Andrew Bailey (with Sarah Breeden, Swati Dhingra, Dave Ramsden and Alan Taylor), argued that disinflation remains broadly on course. Some members emphasized that “upside risks to inflation had continued to recede”. Others focused on weakening activity and downside inflation risks.
In contrast, four members (Megan Greene, Clare Lombardelli, Catherine L Mann and Huw Pill) voted to hold rates steady, expressing concern on “prolonged inflation persistence”. They highlighted elevated services inflation, wage growth, and inflation expectations. These members are “not convinced that the monetary policy stance was meaningfully restrictive” That main require a more “prolonged period of policy restriction”.
Overall, while reaffirming that Bank Rate is likely to continue on a “gradual downward path”, it stressed that further easing decisions will become a “closer call”.
