Analysts say interest rate cut in March now expectedpublished at 12:57 GMT
Faarea Masud
Business reporter
The view from analysts so far is that a cut in March is expected.
Lindsay James from Quilter says that the narrow vote clearly indicates that a cut is anticipated: “This is a much closer split than had been expected, and the Bank’s stance has shifted somewhat, clearly outlining that it expects rates to be cut further based on the current evidence”.
She adds: “Crucially, the Bank will also want to see evidence of cooling wage growth.
“Recent payrolls data has shown persistent weakness in the labour market, and this could bring pay settlements, and subsequently inflation, down faster than the Bank currently assumes.
”Slower wage growth will mean a cool-off in the economy, bringing inflation down further, clearing the way for a rate cut.”
Analysts at Hargreaves Lansdown say the close vote also indicates a rate cut next month, as well as economists at Capital Economics who say the Bank appears more open to cuts.
“What’s more, two of the five who voted to keep rates on hold indicated they could vote for a rate cut soon,” writes Paul Dales from Capital Economics.