Link Securities | The Bank of England’s (BoE) Monetary Policy Committee approved by five votes to four a quarter-point cut in its benchmark interest rate to 3.75%, the first cut since last August. The four members who voted against the move argued for keeping rates unchanged. On this occasion, BoE Governor Andrew Bailey supported the decision to cut rates. The BoE’s benchmark rate is now at its lowest level since 2022.
In its statement, the committee noted that future monetary policy easing will be guided by the evolution of the inflation outlook, adding that the degree of monetary policy tightening has diminished. It should be noted that UK inflation slowed to 3.2% in November from 3.6% in October, reaching its lowest level in eight months. In addition, committee members reiterated their guidance for a gradual pace of further easing, while noting that future decisions would be more balanced.
Markets currently estimate a loosening of approximately 62 percentage points by the BoE by the end of next year, compared to approximately 66 percentage points prior to the decision.
