5th Feb 2026 12:18
(Alliance News) - The Bank of England on Thursday left interest rates unchanged, in another tight vote, but hinted at further cuts ahead as inflation makes progress towards its 2% target.
The decision by the BoE's Monetary Policy Committee, which was in line with consensus, leaves bank rate at 3.75%.
Five of the nine-strong MPC backed the status quo which followed December's 5-4 vote for a quarter point cut from 4.00%.
The vote of BoE Governor Andrew Bailey once more proved crucial as he supported leaving rates on hold, after backing a cut in December.
Bailey was joined by Megan Greene, Clare Lombardelli, Catherine Mann and Huw Pill in voting in favour of leaving rates unchanged. Sarah Breeden, Swati Dhingra, Dave Ramsden and Alan Taylor put the case for a quarter point cut.
In a statement, the MPC said the "risk from greater inflation persistence has continued to become less pronounced, while some risks to inflation from weaker demand and a loosening labour market remain."
In addition, the statement said that reflecting the impact of monetary policy, and consistent with evidence of subdued economic growth and building slack in the labour market, "pay growth and services price inflation have generally continued to ease."
"On the basis of the current evidence, bank rate is likely to be reduced further. Judgements around further policy easing will become a closer call," the statement added.
The MPC sees CPI inflation falling back to around the 2% target from April, owing to developments in energy prices including from the budget.
Governor Bailey said: "While I am more confident in the overall path of wage disinflation, it is naturally less clear when and how much the expected upcoming drop in inflation will influence wage settlements. Overall, the risks from inflation persistence appear to have continued to reduce. I therefore see scope for some further easing of policy. This does not mean that I expect to cut bank rate at any particular meeting. I will go into the coming meetings asking whether a cut is justified."
Alan Taylor, who voted for a cut, said: "If we expect to be at or below the target with significant slack emerging in about six months, a neutral rate of 3% should be in our sights now."
By Jeremy Cutler, Alliance News reporter
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