BOE: Rates On Hold, But Again Guides Higher For Longer

The Bank of England left rates unchanged at 5.25% as expected and maintained its "higher-for-longer" guidance in the November statement.

• The MPC voted by a majority of 6 - 3 to maintain Bank rate, with Mann, Haskel and Greene opting for a 25bps hike in line with our preview.
• The November guidance paragraph was materially unchanged compared to September, but included reference to the latest bank projections to justify keeping rates restrictive for an extended period of time.
• Modal forecasts for CPI at market rates show headline is expected to decline to 3.1% Y/Y by Q4 2024, 1.9% Y/Y in 2025 and 1.5% in 2026, while mean forecasts are slightly higher at 3.4% in Q4 2024, 2.2% in 2025 and 1.9% in 2026.
• The Bank do not forecast negative Y/Y GDP growth through to Q4 2026, but growth is seen at 0.0% Y/Y in Q4 2024, 0.4% in 2025 and 1.1% in 2026.
• Uncertainties around the Labour Force Survey were acknowledged, though the range of indicators that the Bank use to track the labour market point to a loosening backdrop. The ONS outlined further details of the refinement process earlier Thursday.
• The MPC addressed the ONS Blue Book GDP revision, but said the higher growth data through 2021 had little material impact on the current policy debate.