Bank of England Holds Rates at 3.75% in Surprisingly Close Vote

The Bank of England left interest rates on hold at 3.75% in a surprisingly close 5-4 split vote, with Governor Andrew Bailey and external policymaker Catherine Mann saying they could join those pushing to cut borrowing costs at some point.

Below are key excerpts from the individual comments from members of the Monetary Policy Committee in minutes for this month's decision.

VOTED TO MAINTAIN BANK RATE AT 3.75%

GOVERNOR ANDREW BAILEY

"Overall the risks from inflation persistence appear to have continued to reduce."

"I therefore see scope for some further easing of policy. This does not mean I expect to cut Bank Rate at any particular meeting. I will go into the coming meetings asking whether a cut is justified."

DEPUTY GOVERNOR CLARE LOMBARDELLI

"Overall the data continue broadly to show strength in wages and underlying inflation, weak activity and softening employment."

"I am more concerned about the costs of cutting rates too quickly than too slowly, including the risks to credibility from any potential policy reversal that is not in response to a new shock."

CHIEF ECONOMIST HUW PILL

"I remain concerned that inflationary pressures stemming from an overly rapid withdrawal of policy restriction over the past two years still need to be contained and eliminated."

"In that light, I continue to favour a cautious withdrawal of policy restriction, guided by longer-term trends rather than short-term news."

EXTERNAL MPC MEMBER MEGAN GREENE

"I continue to place more weight on the risk of inflation persistence, preferring to wait for clearer evidence that inflation will settle sustainably at the target before easing policy further."

"I continue to think the monetary policy stance is not materially restrictive. Finally I believe the cost of a policy error is greater if Bank Rate follows the market path and we end up with inflation persistence versus weaker demand."

EXTERNAL MPC MEMBER CATHERINE MANN

• "New analysis and current developments have moved the appropriate time for a cut in Bank Rate closer
• A cut now would overweight the importance of the near-term mechanical disinflation and risk higher term premia."

VOTED TO REDUCE BANK RATE TO 3.5%

DEPUTY GOVERNOR SARAH BREEDEN

"I place greater weight on downside risks, particularly in the near term, including those from an elevated household saving rate and a weakening labour market."

"I can see a case for taking out some insurance against these downside risks to inflation and think policy should be eased a little faster than implied by the current path."

DEPUTY GOVERNOR DAVE RAMSDEN

• "I see risks to the latest central projection for inflation as now tilted to the downside
• "

"With my starting point for an estimate of the neutral rate of around 3%, I judge that policy should be less restrictive in order to meet the 2% target sustainably in the medium term."

EXTERNAL MPC MEMBER SWATI DHINGRA

"The market-implied path for Bank Rate looks too tight. The costs of making a policy mistake seem much higher on the downside, especially given weak labour demand.

"And the reverse strategy of holding Bank Rate and then cutting aggressively would be no panacea were there to be a sharp downturn in activity and employment."

EXTERNAL MPC MEMBER ALAN TAYLOR

"I now place even more weight on the central and downside scenarios. If we expect to be at or below the target with significant slack emerging in about six months, a neutral rate of 3% should be in our sights now."

Source: TradingView