The Bank of England on Thursday opted to hold rates steady for a second straight meeting, though the vote was closer than expected.
The vote in favor of keeping rates at 5.25% was 6-to-3, and not the 8-to-1 expected.
Inflation has been coming down faster than the U.K. central bank has projected the last two months, while the economy may have contracted in the September-ending quarter.
“The decision whether to increase or to maintain Bank Rate at this meeting was again finely balanced between the risks of not tightening policy enough when underlying inflationary pressures could prove more persistent, and the risks of tightening policy too much given the impact of policy that was still to come through,” said the central bank in simultaneously released minutes.
The three who wanted a hike — including new member Megan Greene — said that there was evidence of more persistent inflationary pressures.
“It’s significant to mention that the decision to hold the rate was split, with 3 members of the Bank of England supporting a rate hike. Should inflation remain elevated the hawks at the Bank of England are likely to attract additional support from voting members concerned around price pressures,” said Edward Park, chief investment officer at Brooks Macdonald.
The pound
GBPUSD,
rose above $1.22 after the decision, though the yield on the 2-year gilt
BX:TMBMKGB-02Y
was still lower on the day.
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