The Bank of England on Thursday left interest rates unchanged at 4.75%, although the vote was more divided than had been forecast.

The BoE’s Monetary Policy Committee voted 6-to-3 for the status quo, opting not to follow the European Central Bank and US Federal Reserve in easing monetary policy by a quarter percentage point.

MPC ’dove’ Swati Dhingra was joined by Deputy Governor Dave Ramsden and new member Alan Taylor in arguing for a further quarter point cut.

At its November meeting, the BoE cut its benchmark interest rate by a quarter percentage point from 5.0%, reflecting ‘continued progress’ in disinflation.

In a statement, the BoE said a ‘gradual approach to removing monetary policy restraint remains appropriate’.

It said recent quarters had seen progress in disinflation, particularly as previous external shocks have abated, although ‘remaining domestic inflationary pressures are resolving more slowly’.

‘Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further,’ it added.

The BoE cut economic growth expectations, now predicting zero GDP growth in the fourth quarter of 2024, weaker than the 0.3% that had been incorporated in the November Report.

The BoE highlighted ‘uncertainty’ around how the measures that had been announced in the Autumn budget were affecting growth, including the direct consequences of the increase in employer national insurance contributions.

It expects an ongoing ‘loosening’ of the labour market to slow annual private sector wage growth.

The pound was quoted lower at $1.2599 around midday on Thursday in London, compared to $1.2638 shortly before the BoE’s rate call.

The BoE meeting follows inflation figures and a ‘red hot’ wage growth print this week.

In the three months to October, annual growth in average earnings including bonuses picked up to 5.2% from 4.4%, according to the Office for National Statistics. The figure easily beat the FXStreet-cited consensus of 4.6%.

Average earnings growth excluding bonus increased to 5.2% from 4.9%, exceeding consensus of 5.0%. September’s figure was revised up from growth of 4.8%.

Inflation figures on Wednesday contained some modestly better news for the BoE.

According to the Office for National Statistics, the consumer prices index rose by 2.6% in the 12 months to November, picking up pace from a 2.3% rise in the 12 months to October. The figure was in line with FXStreet-cited market consensus.

On a monthly basis, CPI rose by 0.1% in November, slowing from 0.6% growth in October.

Core CPI, excluding energy, food, alcohol and tobacco, rose by 3.5% in the 12 months to November, accelerating from 3.3% in October. Core inflation had been expected to rise by more, to 3.6%.

The closely watched CPI services annual rate was unchanged at 5.0%, below the 5.1% market expectation.

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