Bank of England Keeps Rates at 4.75% – Labour’s Stress Continues
On Thursday, the Bank of England’s Monetary Policy Committee (MPC) decided to leave the Bank Rate where it sits today—4.75%. The outcome was a disappointment for Labour and others hoping for a cut, but it wasn’t the full shock the market had expected.
Vote Breakdown
- Support for a 4.75% rate: 6 votes
- Votes in favour of cutting rates: 3 votes
Surprisingly, the committee is more split than the markets anticipated. Ramsden and Taylor, normally hesitant, joined Dhingra in backing a cut. However, the majority still stuck to the familiar script of a “gradual” approach and refused to pledge further cuts.
What’s Driving the Decision?
The MPC’s headaches come from cooler growth numbers and a knotty labour market. The current Purchasing Managers’ Index (PMI) reports show firms trimming staff at a pace that hasn’t been seen in years. Meanwhile, inflation and wages in the services sector are playing a long, slow game, and the upcoming budget plus U.S. trade policy are muddying the waters.
In short, the Bank of England’s stance is becoming the European “hawk that still flies,” holding its ground despite the softer data.
Market Reactions
Because the MPC appears slightly dented toward easing in 2025, markets have started pricing in a gentler rate reduction cycle—something that’s put extra pressure on the pound. A slow easing move makes sense given the measured inflation climb and the anticipated fiscal stimulus, but expecting less than 50 basis‑points of cuts has always felt a bit stretched. That assessment has left sterling vulnerable to surprise dovish moves or softer economic data.
Why This Matters
Every time the BoE holds rates, it sends a clear signal: the UK’s finances are still navigating choppy waters. For Labour, it means another blow to their campaign promises. For investors—and even mums who wonder if their savings will stretch—this is a cue to stay wary.
