MNI BRIEF: BOE Hikes 15bps On 8-1 Vote

The Bank of England looked through the disruptions caused by the latest Covid wave and raised its policy rate 15 basis points at its December meeting, taking it to 0.25%, with eight members of the Monetary Policy Committee voting in favour and only Silvana Tenreyro voting against.

Market pricing had suggested only a slim possibility of a hike but in November the MPC collectively said a hike was likely in coming months and policymakers since then had said nothing to suggest that they were inclined to delay and they duly delivered at the December meeting.

The majority on the MPC said that the onset of Omicron Covid variant made the decision finely balanced, giving reasons for delay, but that there was "a strong case for tightening monetary policy now" in light of strong underlying inflationary pressures and that, as past experience has shown, the new variant could "increase these inflationary pressures further."