- Prior 0.50%
- Bank rate vote 8-1 (Cunliffe dissented in favour of maintaining bank rate at 0.50%)
- Some further modest tightening may be appropriate in the coming months
- There are risks on both sides of policy judgment depending on how inflation prospects evolve
- Expects Q1 GDP to rise by around 0.75% q/q (previous forecast sees flat growth)
- Majority sees policy should be tightened to reduce risk that inflation becomes embedded
- Global inflation pressure will strengthen considerably in the coming months
- Inflation expectations remain well anchored at present, will monitor closely
- Full statement
Yikes. The bank rate vote in itself says a lot that they are not looking to be too aggressive. The pound has dropped from 1.3200 to 1.3130 on the back of that as those who would've thought the BOE might favour a 50 bps rate hike today are being sent to the cleaners.
Their remarks on inflation also don't seem too pressing despite the urgency to have acted over the past three meetings. This doesn't exactly sound like a central bank that is willing to tighten much more to counteract rising cost pressures.
There is also a subtle change in the forward guidance wording that further backs the narrative above. In February, the BOE said that "some further modest tightening is likely to be appropriate" whereas now they are saying that "some further modest tightening may be appropriate". It's not a big change but it is says something when they do want to make such an alteration.
I mean don't get me wrong. They can still be as aggressive as they are now but the change in wording isn't really called for, especially in a sensitive period like we are in now. Sure, it grants them flexibility but it is peculiar as for the timing of things.