For the fourth consecutive meeting, Bank of England has maintained interest rates at 5.25 per cent. The Monetary Policy Committee (MPC) disclosed a 6-3 majority vote in favour of keeping rates steady, consistent with many economists' predictions.
Notably, this marks the first instance in over three years that any MPC member has voted for a rate cut, resulting in the committee's first three-way split since 2008. Following this decision, there has been a shift in forecasts, with Capital Economics suggesting the possibility of the first cut in the upcoming decision on March 21. While the Bank had raised the base rate 14 times between 2021 and last summer to combat inflation, it has maintained stability recently as inflation subsided.
The widely anticipated vote to hold rates aligns with most forecasters' expectations, with a majority anticipating the first cut to occur in May or June this year. The decision coincides with the recent choice by the US Federal Reserve to keep interest rates at a 12-year high. In the accompanying notes to its decision, the Bank highlighted a "relatively sharp" decline in headline inflation, along with services inflation and wage growth falling more than anticipated.
However, it cautioned about "material risks" from developments in the Middle East and shipping disruption in the Red Sea.