The Bank of England's Monetary Policy Committee voted 7-2 to hold Bank Rate at 3.75% at its June meeting, with external member Megan Greene and Chief Economist Huw Pill dissenting in favour of a 25 basis point increase to 4.00%. The decision was announced on 18 June.
CPI inflation had fallen to 2.8% ahead of the meeting, close to the Bank's 2% target, but the committee cautioned that inflation was likely to rise later in 2026 as higher energy prices passed through to household bills and business costs. That risk assessment underpinned the split on the committee.
TWO DISSENTS SIGNAL HAWKISH TILT
Greene and Pill both argued that the balance of risks warranted an immediate move to 4.00%. Their votes leave the MPC visibly divided at a moment when headline inflation is close to target but forward-looking indicators suggest a bumpier path in the second half of the year.
The majority preferred to keep policy on hold, judging that maintaining Bank Rate at 3.75% gave the committee time to assess incoming data on wages, services inflation and the pass-through from energy prices before committing to further tightening. The vote pattern nonetheless raises the bar for a cut at forthcoming meetings.
The minutes accompanying the decision set out the committee's view that upside risks to the inflation outlook had increased, even as recent outturns had been encouraging. That framing keeps the door open to a hike later in the year if the risks the majority identified crystallise.
GILT STOCK AT £522 BILLION
The Bank confirmed that its stock of UK government bonds held for monetary policy purposes stood at £522 billion. The gilt portfolio, built up through quantitative easing and being wound down through active sales and maturities, remains a significant part of the Bank's balance sheet even as the run-off continues.
For markets, the combination of a hold, two dissents and a warning that inflation could climb again shifts the near-term risk balance towards further tightening rather than easing. Sterling short rates and gilt yields are likely to reflect the more hawkish tone of the vote and minutes.
The MPC's next scheduled decision will provide the first opportunity to see whether the two dissenting voices attract additional support, or whether incoming data allow the majority to hold the line at 3.75% for longer.
The 7-2 vote is the most granular signal available from a Bank of England meeting and confirms that the debate on the committee has moved on from the more even splits earlier in the cycle. With CPI at 2.8% but the majority explicitly flagging that inflation is likely to rise later in 2026 as higher energy prices pass through, the risk assessment underpinning the hold has a distinctly hawkish tilt. The £522 billion gilt portfolio is a reminder that the balance sheet channel of policy is also active, with the run-off proceeding independently of the Bank Rate decision.
Sterling markets will now focus on wage data, services inflation and energy price developments, all of which have been repeatedly cited by MPC members as the variables most likely to determine whether the two hawkish votes attract additional support at forthcoming meetings.