Investing.com - The Bank of England left interest rates unchanged Thursday, taking a gradual approach towards easing its monetary policy as inflation pressures remain significant.
Policymakers voted 6 to 3 to keep the Bank Rate at 4.75%, instead of 7-2 split expected, after having cut by 25 basis points in November, its second cut this year after starting to ease monetary policy in August, its first cut since the pandemic in 2020.
UK consumer price inflation climbed to 2.6% in November from 2.3% the prior month, according to data released earlier this week, surging further away from the Bank of England’s 2.0% medium-term target.
Additionally, British pay rose more than expected in the three months to October, raising worries over underlying inflation pressures.
The Bank's updated macro projections indicated that the Autumn Budget could boost inflation by c.0.5pp, resulting in inflation returning to 2% only in early 2027, a year later than assumed in the Bank's August projections, noted analysts at UBS, in a note.
“However, during the press conference Governor Andrew Bailey flagged significant uncertainty related to the pass- through of the Budget measures and the potential adjustment of the labour market, thus signalling that the BOE will stick to a data-dependent approach to future policy.”
Investors have currently priced in just a 50% chance of a rate cut in February and only two cuts in 2025 as a whole.