United Kingdom: BoE kicks off easing cycle with narrow vote – UOB Group

The Bank of England (BOE) decided to reduce its Bank Rate by 25 bps from 5.25% (where it has stood since Aug 2023) to 5.00% at its Aug meeting. While Thu’s move was in line with our expectations, it was a close call, UOB Group economist Lee Sue Ann notes.  

A close call from the BoE

“BOE kicked off its easing cycle on 1 Aug with a 25bps rate cut to its Bank Rate from 5.25% to 5.00% in a 5-4 vote split. While the move was in line with our expectations, it was a close call.”

“The narrow vote, as well as hawkish elements throughout the accompanying press release and minutes; Monetary Policy Statement (MPS), as well as Governor Andrew Bailey’s press conference; reinforces our view that the BOE is in no rush to reduce rates again.”

“We see a rate hold at the next meeting on 19 Sep, and another rate cut at its 7 Nov meeting, on the premise that data on services inflation and wage growth will improve in the coming months, making the committee more comfortable with proceeding with one more cut this year.”