Bank of England Holds Rates at 3.75% in Tight Decision

Summary

The Bank of England held its policy rate at 3.75% in a tight 5-4 vote. Vania Stavrakeva argued UK inflation should fall as past supply shocks fade, AI adoption lowers costs, and higher unemployment and taxes weigh on demand. Ana Andrade said the BoE's tone shifted dovishly, with more concern about labour-market weakness and the savings rate than sticky inflation. She noted that dropping 'gradual' leaves room for back-to-back cuts or a lower terminal rate.

• Bank of England kept rates at 3.75% in a 5-4 vote.
• Guests focused on the surprise vote split and the BoE's changed tone.
• Vania Stavrakeva sees UK inflation falling from supply and demand shocks.
• Ana Andrade says the BoE is more worried about growth and labour-market downside risks.
• Ana Andrade highlights the removal of 'gradual' from BoE guidance.
• The annual pay survey came in at 3.4%, slightly below the 3.5% expectation.
• No specific tradable securities or instruments were named in the discussion.