Bank of England Holds Rates in Tight 5-4 Vote, Signals Cuts Ahead

The Bank of England’s Monetary Policy Committee (MPC) delivered a finely balanced decision at its February meeting, keeping the Bank Rate unchanged at 3.75%. The narrow margin highlights growing divisions within the committee as the UK economy faces slowing growth, rising unemployment, and persistent inflationary pressures.

Key Highlights:

• Decision Split: 5 members voted to hold rates, while 4 pushed for a 25 basis point cut to 3.5%.
• Inflation Outlook: Headline CPI rose to 3.4% in December, but policymakers expect a sharp fall in the coming months.
• Governor’s Statement: Andrew Bailey emphasized caution, noting the need to ensure inflation remains under control before easing policy.
• Economic Forecasts: The BoE downgraded growth projections for 2026, citing weaker labor market conditions and rising unemployment.
• Market Reaction: Analysts anticipate a rate cut later this year, with investors closely watching inflation data and wage growth trends.

Sources: Reuters, CNBC, Financial Times, Bank of England