BOE Cuts Rates By 25bps, But Decision Finely Balanced

The BOE MPC voted 5-4 to reduce Bank Rate to 5.00%, though the decision was "finely balanced" for some of the members electing to ease policy. 

• Chief Economist Pill voted with Greene, Haskel and Mann in voting to hold rates, with these members requiring stronger evidence that upside pressures to inflation would not materialise. 
• The Monetary Policy Summary guidance was little changed, with rates still needing to "remain restrictive for sufficiently long" and the MPC needing to "monitor closely the risks of inflation persistence". 
• Although the Summary highlighted that "there has been some progress in moderating risks of persistence in inflation", there remains a risk that "inflationary pressures from second-round effects will prove more enduring in the medium term"
• As such, the August MPR forecasts showed 2-year and 3-year ahead inflation forecasts containing an upside skew (albeit still at/below the 2% target).
• Andrew Bailey noted to the press that the BoE must "be careful not to cut interest rates too quickly or by too much", underscoring the cautious and meeting-by-meeting approach signaled in the Summary/Minutes. 
• The MPR notes that the MPC will vote on the 24/25 reduction in Gilt holdings (QT) at the September meeting.