BoE leaves rates at 3.75% with a 6-3 vote
The Bank of England kept its policy rate at 3.75% for a fifth straight meeting. The vote split was 6-3, with Governor Bailey pushing back against expectations of an imminent hike.
The BoE also flagged it may further reduce the pace at which it shrinks its bond holdings. It raised its estimate for the increase in the term premium on long-term interest rates due to Quantitative Tightening by 5bps to between 20-30bps.
A slower pace of BoE balance sheet reduction is expected, with a potential decrease in gilt holdings rundown to £50bn over October 2026 to September 2027 from currently £70bn. The BoE’s decision may weigh on the British Pound, as rate expectations pose a headwind for GBP.