BOE cuts bank rate by 25 bps to 4.50%, as expected

• Prior 4.75%
• Bank rate vote 9-0 vs 8-1 expected
• Domestic inflationary pressures are moderating, but they remain somewhat elevated
• Will pay close attention to any consequent signs of more lasting inflationary pressures
• GDP growth is expected to pick up from the middle of this year
• There has been sufficient progress on disinflation in domestic prices and wages
• A gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate
• Will continue to monitor closely the risks of inflation persistence
• Monetary policy will need to continue to remain restrictive for sufficiently long
• Will decide the appropriate degree of monetary policy restrictiveness at each meeting
• Full statement

The pound has fallen further amid the mix of everything, with the bank rate vote being unanimous and softer growth projections by the BOE. That said, the latest forecasts also point to higher inflation and the latest wording in saying that they will take on a more “gradual and careful” approach is interesting. On the latter, I would take it to mean that they won’t be moving quickly in terms of policy easing i.e. no back-to-back moves.

This article was written by Justin Low at www.forexlive.com.