- Bank of England Maintains Interest Rate at 5.25 Percent
- Narrow 5-4 Vote Reflects Market Uncertainty
- Bank’s Decision Ends Prolonged Period of Rate Hikes
The monetary policy committee (MPC) of the Bank voted 5-4, the narrowest conceivable margin, to maintain the cost of borrowing.
This morning, that likelihood had dropped to just below 50%.
November 2021 was the last occasion the MPC voted to leave interest rates unchanged.
The fact that four members, namely Jon Cunliffe, Megan Greene, Jonathan Haskel, and Catherine Mann, voted to increase the cost of borrowing could be interpreted as a sign that the Bank may raise rates again in the coming months.
It plans to sell £100 billion in bonds next year, boosting its asset total to £658 billion.
“This is very good news. However, there is no place for complacency. We must ensure that inflation returns to normal, and we will continue to take the necessary steps in this regard.
It has previously identified both of these statistics as crucial factors to monitor.
In the end, the five members who voted to maintain the status quo concluded that “the most recent developments meant that the decision to maintain the Bank Rate at this meeting rather than increase it was precariously balanced.”
“Conditions were likely to warrant maintaining a restrictive policy stance until significant progress was made in bringing inflation back to the 2 percent target”
This suggests that the Bank rate may rise again, and even if it doesn’t, it won’t fall quickly.