The Bank of England kept rates on hold at 5.25%
The Bank of England (BoE)’s Monetary Policy Committee (MPC) voted on 2 November to keep
Bank Rate on hold at 5.25% (in line with HSBC and consensus estimates). According to the
minutes, “the decision whether to increase or to maintain Bank Rate at this meeting was again
finely balanced”. However, for the majority, falling inflation was enough to warrant a pause,
albeit “a further rise in Bank Rate remained a possibility”.
We don’t expect rate cuts until Q1 2025
The market appears to have taken this decision as a “hawkish hold” with the majority of the
committee remaining concerned about the persistence of wage growth-driven inflation. Broadly,
this is what we expected to see: a hold, with the door still open to the possibility of further hikes,
and no near-term prospect of rate cuts. We don’t expect the BoE to lower rates until Q1
2025, while the market is pricing easing to come sooner, around Q3 2024 (chart 1).