Bank of England Maintains 3.75% Rate as Meeting Minutes Reveal Deep Policy Divisions

The Bank of England has kept interest rates unchanged at 3.75%, though the meeting minutes reveal deep divisions among policymakers about the appropriate course of action. These divisions offer insight into the complex considerations shaping monetary policy.
The monetary policy committee’s 5-4 split was accompanied by detailed meeting minutes showing the range of views among members. Four members presented strong cases for immediate easing, while five argued for maintaining current settings, with each side citing different aspects of the economic outlook to support their positions.
The minutes show that some members emphasized the weaker growth outlook and falling inflation as justification for immediate cuts. Alan Taylor specifically suggested that a 3% base rate should be “in our sights,” while Swati Dhingra has consistently advocated for more aggressive easing. Dave Ramsden and Sarah Breeden, both senior Bank officials, also supported cutting.
By contrast, those voting to hold emphasized the need to ensure inflation stays under control. Megan Greene specifically warned about high consumer inflation expectations and strong wage growth, suggesting that cutting too quickly could constitute a “policy error.” Other members holding emphasized the importance of confirming that inflation improvements are sustainable.
Governor Andrew Bailey, who voted to hold, struck a middle ground. He acknowledged the improving inflation outlook, projecting it will fall to around 2% by spring, while emphasizing the need for caution. The Bank forecasts GDP growth of just 0.9% this year with unemployment reaching 5.3%. Chancellor Rachel Reeves’s budget measures are expected to drive inflation down to 2.1% by mid-2026, compared to 3.4% in December. The detailed minutes reveal that this decision genuinely balanced competing valid concerns.