BOE raises bank rate by 50 bps to 3.50%, as expected

• Prior 3.00%
• Bank rate vote 7-2 vs 9-0 expected (Tenreyro, Dhingra voted to keep rates unchanged at 3%, Mann voted to raise rates by 75 bps instead)
• Further increases in bank rate may be required
• Q4 GDP seen at -0.1% q/q (previously -0.3% in November)
• Labour market remains tight
• Inflation expected to fall gradually in Q1 2023
• But there has been evidence that could indicate greater persistence of inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term
• That justifies a further forceful monetary policy response
• BOE will consider and decide the appropriate level of bank rate at each meeting
• Full statement

The split in votes is the most eye-catching detail at first glance and the pound has taken a bit of a knock on that. And when you put that together with some changes in the language on forward guidance, that makes for a more dovish rate hike this time around by the BOE.

In terms of the dissent, Tenreyro and Dhingra argued that 3% rates are "more than sufficient" to bring inflation back towards the 2% target, in the view that inflation has peaked - as according to the latest projections by the central bank.

As for the language, the BOE omitted the wording that "policy is not on a pre-set path" and the part on any changes to the "scale, pace and timing" to the bank rate will depend on the outlook. In reading that, I would say it just means that they are reaching a point where a slower pace of rate hikes will be needed and a top is coming in soon.