Bank of England Holds Bank Rate at 5.00% as MPC Seeks More Evidence on Inflation

The Bank of England's Monetary Policy Committee voted eight to one on Thursday to hold the Bank Rate at 5.00%, a day after the US Federal Reserve announced a 50-basis-point cut, and signalled that further evidence of easing price pressures is needed before the next move lower.

The sole dissenter was Swati Dhingra, who voted for an immediate quarter-point reduction. The remaining eight members judged that conditions had not yet shifted sufficiently to warrant another cut, having already reduced the rate from 5.25% at the August meeting — the first reduction since March 2020. That August cut had been delivered by a five-to-four vote.

WAGES AND SERVICES INFLATION

The Committee's caution centred on two sources of domestic price pressure: wage growth and services inflation. Both measures have remained elevated relative to levels the MPC considers consistent with the 2% consumer price target over the medium term, and policymakers said they required more data before concluding that the disinflation trend was sufficiently durable to justify a faster pace of easing. The minutes noted that the Committee would continue to monitor incoming economic data closely and set policy on a meeting-by-meeting basis rather than committing to a pre-determined path.

Annual private-sector regular pay growth eased to 4.9% in the three months to July, broadly in line with the MPC's August projections, but remained well above levels consistent with the 2% target.

Governor Andrew Bailey and his colleagues on the Committee have consistently framed the current approach as gradual, stressing that the pace of cuts will depend on how convincingly underlying inflationary pressures dissipate rather than on any pre-set timetable.

NEXT MEETING

The MPC's next scheduled decision falls on 7 November, by which point one additional monthly inflation print and a further labour market report will have been released. The Bank's updated economic forecasts and a full Monetary Policy Report are also due to be published at the November decision.