The Bank of England's Monetary Policy Committee voted 8–1 on Thursday, 7 November 2024, to reduce Bank Rate by 25 basis points to 4.75%, delivering the second cut of the current easing cycle. The sole dissenter was external member Catherine Mann, who preferred to hold rates steady. The other eight members, including Governor Andrew Bailey, judged that the balance of evidence justified a further reduction.

Consumer price inflation had fallen to 1.7% in September 2024, slipping below the Committee's 2% target for the first time since 2021. The MPC noted that services inflation and underlying wage dynamics remained elevated relative to levels consistent with inflation being durably at target over the medium term.

AUTUMN BUDGET AND THE INFLATION OUTLOOK

The MPC's assessment took account of the Autumn Budget 2024, delivered by the Chancellor shortly before the rate decision. The Committee said it expected the Budget measures to provide a boost to CPI inflation of just under half a percentage point at its peak, through both the direct effects of Budget measures on prices and a smaller margin of spare capacity in the economy. The MPC said the effect of higher employment costs would depend on the degree to which they were passed into prices, wages and employment or absorbed in margins.

The Budget was also assessed to have modestly raised the near-term path for economic activity in the Bank's projections, as increased government spending supported demand. Governor Bailey indicated that the MPC expected to be able to cut rates gradually but that the pace would remain data-dependent and could be adjusted if the inflation or growth outlook shifted materially.

GRADUAL EASING SUPPORTED BY MAJORITY

Members voting with the majority argued that the balance of risks had shifted sufficiently to justify a further reduction in Bank Rate. They cited continued progress in disinflation as previous external shocks abated, although domestic inflationary pressures were resolving more slowly. The November Monetary Policy Report, published alongside the decision, updated the Bank's forecasts to incorporate both the Budget and the latest global developments, including trends in energy prices and the pace of monetary easing across other major central banks.

At 4.75%, Bank Rate stood 50 basis points below its peak of 5.25%, which was reached in August 2023 and held for a year until the first cut in August 2024. The Committee said a gradual approach to removing policy restraint remained appropriate, and gave no explicit guidance on the December meeting.