Commenting on the MPC vote and how the Bank needs to keep all of its options open

Commenting on the MPC vote and how the Bank needs to keep all of its options open, Rupert Thompson, Head of Research at Kingswood, said: “The BOE as expected left rates unchanged. The surprise, however, was that two of the nine-strong committee actually voted for a 0.25% rate cut. In reality, however, the split vote just continues the shift in recent months both by the Bank and the market away from the view that rates will necessarily have to head higher. The Bank continues to state that modest policy tightening at a gradual and limited pace might be needed if the economy performs as is expected. Yet, it also highlights that a rate cut could be necessary if downside risks materialise. In a nutshell, the Bank is sitting on the fence and keeping its options open. While the risk of a No-Deal Brexit has clearly fallen sharply, Brexit will remain a major source of uncertainty, and indeed drag, on the economy for a good while yet. The need for the Bank to keep all of its options open is obviously all the greater with Mark Carney’s term as Governor soon coming to an end – and his successor still unknown.”