IoD press release MPC’s divided vote signals fragile downward path for interest rates
Commenting on the decision of the Monetary Policy Committee of the Bank of England to cut interest rates to 4.0%, Anna Leach, Chief Economist at the Institute of Directors, said:
“Today’s widely anticipated 25‑basis‑point rate cut—reducing the Bank Rate to 4.0%—provides welcome relief for households and businesses grappling with high borrowing costs. But the tight 5–4 vote, following an unprecedented second vote round, underscores deep divisions within the MPC. Most notably, Deputy Governor Clare Lombardelli joined the hawks in voting to hold, signalling caution amid rising inflation concerns. The minutes emphasise elevated upside risks to inflation, with the Bank now expecting a peak of 4% in September, driven by persistent food and wage pressures, and a slowing disinflation process. While policymakers reaffirm a “gradual and careful” approach to further easing, today’s split decision is a stark reminder that future cuts are not assured.”
