"The principal reason to hold off from easing again is that at 3.4% in December, inflation remains well above the 2% target. In itself this is not a huge issue, bearing in mind that this lies a touch below the Bank's baseline projection in November of 3.5% and that its medium-term forecast is consistent with hitting the target. But with the stance of policy less restrictive than previously, there are greater risks that further easing is unwarranted."
"Keeping bank rate unchanged at 3.75% at next week's meeting looks a near-certainty. Some of the MPC doves that favoured a cut in December still harbour some concerns around sticky wage growth and inflation. Although the data over the last few weeks has tilted in a slightly dovish direction, this does not appear to be anywhere near enough to prompt a majority of the MPC to favour back-to-back cuts."
Most economists expect the Bank of England's Monetary Policy Committee to hold Bank Rate at 3.75% to prevent inflation from rising further while focusing on economic growth. The MPC meets for the first time in 2026 after lowering rates in December 2025. Inflation was 3.4% in December, above the 2% target but slightly below the Bank's November baseline projection of 3.5%, and the medium-term forecast is consistent with hitting target. Some policymakers remain cautious because of sticky wage growth and only mildly dovish recent data. Analysts warn that a less restrictive policy stance raises risks that further easing could be unwarranted.
Read at London Business News | Londonlovesbusiness.com
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