BOE: Holds Rates At 5.25%; Drops Guidance For Further Tightening

The Bank of England held policy rates steady at 5.25% at its first meeting of 2024, and removed guidance indicating that "further tightening" may be required in its policy statement.

• 6 members of the MPC voted for unchanged rates, while 2 members - Haskel and Mann - voted for a 25bps hike. The dovish Dhingra voted for a 25bps cut in Bank Rate - a risk we had flagged in our preview.
• In contrast to previous meetings, the minutes no longer noted that the decision was "finely balanced" between a hike and a hold.
• The statement noted that "the restrictive stance of monetary policy is weighing on activity", and that the risks to inflation were "more balanced" in the updated set projections.
•  As such, the updated forecasts indicated no difference between the Bank's mean and modal CPI forecast at the two- and three-year horizons. CPI is seen at 2.3% Y/Y in Q1 2026 and 1.9% Y/Y in Q1 2027.
• Despite dropping references to the risk of further tightening, the Bank continues to signal that rates will need to "remain restrictive for an extended period".