Interest Rate Decision and Policy Statement
1. Interest Rate Level: The Bank of England maintained its interest rate at 4.00% as expected, interrupting the quarterly rate cuts that had been in place since August of last year.
2. Voting Ratio: The interest rate decision was passed by a 5-4 vote, with Dingela, Taylor, Ramsden, and Briden advocating for a 25 basis point cut.
3. Forward Guidance: The word "cautious" was removed from the interest rate guidance, replaced with "likely to continue along a gradual downward path."
4. Economic Forecasts: The 2025 GDP growth forecast was raised to 1.5%, while the 2025 CPI forecast was lowered to 2.5%.
5. Market Impact: The pound fell nearly 40 points against the dollar before rebounding somewhat, and the UK government bond market rose.
6. Market Expectations: Traders maintained their bets on further easing by the Bank of England, expecting a 15 basis point rate cut in December.
Governor Bailey's Press Conference
1. Economic Activity: There is a risk that economic activity is cooling excessively and for too long. The labor market is slowing.
2. Inflation Expectations: The 3.8% inflation rate in September is expected to have peaked; a clearer downward path for inflation is needed.
3. Autumn Budget: The December policy decision will take the fiscal budget into consideration, but no comments will be made on fiscal policy.
4. Interest Rate Guidance: Committee members are significantly divided on the issue of final interest rates; the current market curve indicates a reasonable policy path.
