Bank of England interest rate decision: A Hawkish-ish Hold

Commenting on the Bank of England decision to leave interest rates unchanged at 5.25% today, Royal London Asset Management’s senior economist, Melanie Baker, said:

"The key question for now is whether this will prove to be more of a lasting pause, or a ‘skip’. The minutes of the meeting could support either, but it will all depend on the data.

"The Bank of England acknowledged that the decision had become more finely balanced and the more neutral guidance wording from the August decision was retained. The Monetary Policy Committee (MPC) sound a touch more downbeat on activity and perhaps a bit less worried on inflation too.

"In the context of still-strong domestic inflation pressure though, I expect the Bank to hike rates once more by the end of the year. At the next meeting in November the MPC will have more data to process, including a further set of GDP revisions, and have a chance to fully review their forecasts too. It is also worth pointing out that, added to those four MPC members that wanted a hike today, most of those who voted to keep rates on hold thought that the decision was ‘finely balanced’. For me, that also helps skew the balance of risk in favour of one more hike. However, there is plenty of key data to be released before the November decision.