![Bank of England](https://images.forexlive.com/images/BOE_id_8f062ac7-c040-474f-8a05-4e17b3354f97_original.jpeg)
- Prior 5.25%
- Bank rate vote 4-5 vs 8-1 expected (Bailey, Broadbent, Dhingra, Pill, Ramsden vote to hold)
- Underlying growth in the 2H 2023 is likely to be weaker than expected
- Labour market remains tight by historical standards
- CPI inflation is expected to fall significantly further in the near-term
- Monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium-term
- Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures
- Full statement
This is quite a surprise and the pound has fallen on the initial reaction with GBP/USD dropping from around 1.2295 to 1.2240 levels currently. Given the technical picture here, the decision could set off a further selloff in the pound as traders look to readjust their pricing on the BOE outlook.
That being said, they don't have to do too much. Markets were looking for one more rate hike at best by the BOE and this doesn't exactly throw that option out of the window. It now comes down to whether the UK economy is going to decline rapidly so as to prevent the central bank from making another U-turn to raise rates one more time before all is said and done.
I don't think we're at the point of no return yet but the BOE is certainly walking a very, very tight line in trying to manage all of this.