- The Bank of England MPC voted by a majority of 7-2 to maintain Bank Rate at 0.5%, in line with expectations.
- The Bank of England turns dovish in May Inflation Report using the word "gently rising rates"
- Monetary Policy Committee member all agreed that any future increases in bank rate are "likely to be at a gradual pace and to a limited extent"
- The Bank of England cuts its near-term inflation and GDP forecast.
The Bank of England decided to keep the Bank rate unchanged in May with seven of nine Monetary Policy Committee members supporting the decision while two members dissented.
Both the decision and the voting decomposition was broadly in line with market expectations while the tone of the quarterly Inflation Report has turned dovish as the Bank of England removed the word "expected" from the policy guidance saying it is likely to raise the Bank rate at a gradual pace and to a limited extent.
MPC judges that the impact of the past depreciation of sterling on CPI inflation, while remaining significant, is likely to fade a little faster than previously thought. Taking external and domestic influences together, CPI inflation is projected to fall back slightly more quickly than in February, reaching the target in two years. These projections are conditioned on a gently rising path for Bank Rate over the next three years.
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