• Prior 5.25%
  • Bank rate vote 6-2-1 vs 8-1-0 expected (Haskel, Mann voted for 25 bps rate hike; Dhingra voted for 25 bps rate cut)
  • Monetary policy will need to remain restrictive for sufficiently long
  • Prepared to adjust monetary policy as warranted by economic data to return inflation to 2% target sustainably
  • Labour market has continued to ease, but remains tight by historical standards
  • GDP growth is expected to pick up gradually
  • Risks to inflation are more balanced
  • Risks around modal CPI inflation projection are skewed to the upside
  • Although services price inflation and wage growth have fallen by somewhat more than expected, key indicators of inflation persistence remain elevated
  • Full statement

As expected, the BOE removed this particular passage from the statement:

"Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures."

That is to make room for a softer policy language, by replacing it with the following:

"The Committee will keep under review for how long Bank Rate should be maintained at its current level."

Besides that, it is a bit of a mixed bag as the BOE now sees lower wages growth forecasts but more sticky inflation in two years' time (2.3% vs 1.9% in November projection). Then, there is the fact that Haskel and Mann continues to vote for 25 bps rate hikes while the most dovish member, Dhingra, voted for a 25 bps rate cut.

At the balance, the pound is little changed with GBP/USD now at 1.2650 levels from around 1.2640 earlier.