Bank's interest rate vote and bond plans are little help to Reeves ahead of budget

"The central bank on Thursday had two pieces of bad news for the chancellor: borrowing costs would be held unchanged at the current elevated level, while the Bank would proceed with a plans to sell billions of pounds in UK government bonds. Both decisions were widely expected in financial markets. But an alternative outcome was not outside the realms of possibility, and could have helped bail out the Treasury a little before the autumn budget."

"Households are coming under pressure from the soaring price of food, while business leaders have said that the chancellor's 25bn increase in employer national insurance contributions (NICs) is being passed on to consumers in the form of higher prices. However, two members the external economists Swati Dhingra and Alan Taylor shared a concern that Britain's economy is in weak shape, and required rates to be cut by a quarter-point to 3.75%."

The Bank of England held interest rates at 4% and confirmed plans to sell billions of pounds in UK government bonds. Inflation is 3.8%, nearly double the 2% target, while households face rising food prices and businesses report employer national insurance increases passing through as higher consumer prices. Two external MPC members, Swati Dhingra and Alan Taylor, voted for a 25 basis point cut to 3.75% citing weak economic conditions. The Bank has been undertaking quantitative tightening, disposing of £100bn of gilts by selling bonds and not replacing maturing debt, and some economists urged scaling back QT amid volatile global markets.

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