The Bank of England kept the Benchmark Interest Rate unchanged at 4.25% amid a split vote among the PI.

Gate News bot reported that, according to Bloomberg, the Bank of England kept the interest rate unchanged at 4.25%, with voting results being more divided than expected, as policymakers weighed the UK’s weak labor market and sluggish growth momentum against the backdrop of escalating geopolitical tensions.

Six of the nine members of the Bank of England’s Monetary Policy Committee voted to keep rates unchanged, while three members – External Affairs Commissioners Swati Dingra and Alan Taylor, and Deputy Governor Dave Ramsden – favored an immediate cut of a quarter of a percentage point. This decision means that interest rates could be cut by a quarter of a percentage point in August. Economists had expected the vote to be seven to two.

The meeting minutes indicate that against the backdrop of further easing of policies, the committee “expects that wage growth will significantly slow down for the remainder of the year.” The minutes are worded in a dovish manner, stating that “there are some signs of deflationary pressures in the labor market.”

The Committee kept its core guidance unchanged that future rate cuts would be “gradual and cautious”.

Traders are focused on the voting results being more dovish than expected. They have increased their bets on further rate cuts, anticipating two more cuts in 2025, each by 25 basis points.

After the repricing, the 10-year gilt yield was around 4.52%, compared to 4.53% before the decision. The pound initially fell, rising 0.1% to $1.344 on Thursday.

Pooja Kumra, senior European and UK rates strategist at TD Securities, said on Bloomberg TV: "A rate cut in August seems a foregone conclusion. Kumra expects wage and inflation data to gradually decline ahead of the next meeting, but warned that it is unlikely to take the same steps as the ECB has done with successive rate cuts, given their adherence to a “gradual and cautious” policy.