6th Nov 2025 12:18
(Alliance News) - The Bank of England on Thursday left interest rates unchanged in a knife-edge vote with the decision of Governor Andrew Bailey proving decisive.
Five members of the nine strong Monetary Policy Committee, including BoE Governor Bailey, voted for the status quo. Bailey was joined by Clare Lombardelli, Catherine Mann, Megan Greene and Huw Pill.
Four MPC members, Sarah Breeden, Swati Dhingra, Dave Ramsden, Alan Taylor put the case for a quarter point cut.
Dhingra and Taylor argued policy was already "significantly over-restrictive, which could unduly damage activity and possibly lead to an undershoot in inflation in the medium term."
But others on the MPC placed greater weight on risks of persistence in inflation, requiring more prolonged monetary policy restriction.
Bailey judged that the overall risks to medium-term inflation had moved down to become more balanced recently but felt there was value in waiting for further evidence.
It represents a second successive hold and only the first time this year that Threadneedle Street has gone two meetings in a row without cutting. So far this year, it has reduced bank rate in February, May and August, so every other meeting.
The decision was as forecast by market consensus, although softer than expected inflation and a weakening labour market prompted some analysts to predict a quarter point cut.
In the accompanying statement, the MPC said the risk from greater inflation persistence has become "less pronounced" recently, and the risk to medium-term inflation from weaker demand "more apparent", such that overall the risks are now more balanced.
But more evidence is needed on both, it said.
Future rate reductions will therefore depend on the evolution of the outlook for inflation.
"If progress on disinflation continues, Bank Rate is likely to continue on a gradual downward path," it said.
The MPC said CPI inflation is judged to have peaked, although it is mindful of recent increases in household inflation expectations.
Underlying disinflation is being underpinned by subdued economic growth and building slack in the labour market, the MPC noted.
In the monetary policy report of projections, the BoE said CPI inflation is projected to slow to 3.2% by March 2026 and that annual wage growth will slow in the remainder of 2025.
Headline GDP is projected to have grown by 0.2% in the third quarter, below the 0.3% forecast in August's report. Headline GDP growth is expected to pick up to 0.3% in the fourth quarter.
The pound traded at USD1.3067 against the dollar compared to USD1.3088 shortly before midday, while the FTSE 100 was down 5 points, rallying from a 32 points drop before the announcement.
A press conference with Governor Andrew Bailey follows at 1230 GMT.
By Jeremy Cutler, Alliance News reporter
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