![\"Andrew](\"https:\/\/dailybusinessgroup.co.uk\/wp-content\/uploads\/2023\/12\/Andrew-Bailey-smiling.png\")
The Bank of England has held interest rates at 3.75%, as expected, but once again the decision was close.<\/p>\n
The monetary policy committee voted by a slender majority, with four of the nine-members preferring a quarter point cut, indicating concerns about the slowing economy.<\/p>\n
Bank of England governor Andrew Bailey voted for a hold but said he could \u201csee scope for some further easing of policy\u201d.<\/p>\n
He had said in December that future decisions on interest rates would be a \u201ccloser call\u201d and reiterated his forecast that inflation would fall close to the Bank\u2019s 2% target from spring onwards. That is sooner than the 2027 prediction.<\/p>\n
\u201cThat\u2019s good news,\u201d said Mr Bailey. \u201cWe need to make sure that inflation stays there. All going well, there should be scope for some further reduction in [the] Bank Rate this year.<\/p>\n
Laith Khalaf, head of investment analysis at AJ Bell, said the vote was a \u201cfar more dovish result than was expected, especially when you consider that Andrew Bailey and Catherine L Mann voted to hold, but sound like they are close to nodding through a cut too.<\/p>\n
\u201cThis will shift enormous focus onto the March meeting, where just one more policy maker voting for a cut could make it a reality.\u201d<\/p>\n
Esther Watt, bond strategist at wealth management firm Evelyn Partners, said: \u201cThe hold was widely anticipated and 98% priced in by the markets but there was some surprise dovishness in the vote.<\/p>\n
\u201cDhingra, Taylor, Ramsden and Breeden all voting for a 25bp cut, and it was only Governor Andrew Bailey\u2019s swing vote that decided the hold 5-4, when a 7-2 call had been expected by analysts.<\/p>\n
\u201cMr Bailey cautioned that \u201cjudgements around further policy easing will become a closer call\u201d and it\u2019s hard to see how you get a closer call than 5-4 on the MPC without cutting rates. <\/p>\n
\u201cThe odds on a March cut have shortened significantly in the light of the vote and some downbeat updates to the BoE\u2019s quarterly updated forecast today.\u201d<\/p>\n
Susannah Streeter, chief investment strategist at the Wealth Club, said: \u201cThe Bank of England has pushed a big red pause button on interest rate cuts as caution remains the name of the game.\u201d<\/p>\n
She said signs of growth in the economy are there, but remain tentative, hence the committee\u2019s restrained decision.<\/p>\n
\u201cThe labour market is showing weakness, Budget changes are set to bring down energy and transport costs and a wave of cheaper Chinese goods are heading this way,\u201d she says.<\/p>\n
\u201cSo, more policymakers could well be swayed to vote for lower borrowing costs next month.\u201d<\/p>\n
Kevin Brown, savings specialist at Scottish Friendly, said: \u201cDecember\u2019s CPI uptick showed how quickly price pressures can reappear, and by holding rates today, the Bank of England clearly wasn\u2019t prepared to risk another cut so soon.<\/p>\n
\u201cBut this pause shouldn\u2019t be mistaken for a change in direction. The labour market is cooling, wage growth is slowing, and inflation is anticipated to fall this year as price pressures fade. <\/p>\n
\u201cIf that plays out as expected, one or two further cuts later this year are still on the cards, with spring still the most likely window for the next move.\u201d<\/p>\n
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