UK: BOE MPC Votes 5-4 To Hold Bank Rate At 4%; Wide Range Of MPC Views Noted

BOE MPC voted 5-4 to maintain Bank Rate at 4.00% in November, with Governor Bailey joining Greene, Mann and Pill in voting for a hold. All other MPC members voted for a 25bp cut.

• In the Minutes, Bailey said that he "would prefer to wait and see if the durability in disinflation is confirmed in upcoming economic developments this year" before cutting again. He also suggested current market pricing is not too dissimilar from the policy implied by a forward-looking Taylor rule, which was a "fair description" of his current position. 
• The trimmed down MPS highlighted a less pronounced risk of greater inflation persistence, with overall medium-term inflation risks now "more balanced".
• The extent of further reductions in Bank Rate will depend on "the evolution of the outlook for inflation". If disinflation progress continues, Bank Rate "is likely to continue on a gradual downward path". 
• Updated projections are based on the BOE's central scenario, "which the majority of the MPC agrees is a reasonable baseline".
• Two alternative scenarios, one covering more persistent inflation pressures and the other weakness in household consumption were provided. MPC member's views around the likelihood and assumptions of these scenarios varied widely. 
• The central projections assume no second-round impact on inflationary pressures from the recent uptick in headline inflation, and fiscal policy is assumed to be as set out in the 2025 Spring Statement. MPC members made no comments on the potential impact of the budget in the Minutes. 
• GDP and inflation projections have no skew embedded.