BoE Maintains Rates, but Voting Split is More Dovish than Expected

Th e Bank of England voted to maintain its Bank Rate at 4.00%. Four MPC members who supported keeping rates unchanged in August continued to favo u r the status quo, while more dovish members—Swati Dhingra, Dave Ramsden, and Alan Taylor—advocated for a rate cut. Additionally, the more neutral Sarah Breeden voted to lower interest rates, while Governor Andrew Bailey moved away from his previous preference for quarterly cuts. The narrow 5-4 voting split, which was less than the anticipated 6-3 consensus, suggests that if Governor Bailey aligns with those advocating for a rate cut, a reduction could occur as early as December, following the upcoming government budget. Although Bailey opted to keep borrowing costs steady, citing the “value in waiting for further evidence” from upcoming economic developments, he acknowledged that overall inflation risks had diminished. Ultimately , t he decision regarding a ny potential rate change will largely hinge on inflation data and the Autumn Budget. W e continue to see a strong case for a rate cut in December, especially since the Budget is expected to implement stricter measures that could hinder growth, while lower inflation data may reassure the BoE that inflation is on a downward trajectory .