BoE policymakers led by governor Andrew Bailey vote 7-2 to keep the benchmark rate at 0.1%, defying market expectations
Bank of England governor Andrew Bailey addresses a media conference at the bank's headquarters in London, Britain, November 4 2021. Picture: CHRIS RATCLIFFE/BLOOMBERG
Officials also pushed back against market pricing for a series of hikes to 1% in 2022, noting that such aggressive action would leave price growth below its 2% goal at the end of their forecast period. The central bank said recent economic data reinforced the view that borrowing costs will have to rise in the “coming months” to keep inflation on target. But it also noted that major uncertainties remain about the jobs market after the end of the government’s furlough programme for those out of work during the pandemic.
Officials indicated increasing concerns about the outlook for growth, noting signs that consumption is weakening because of supply-side bottlenecks and a surge in the cost of oil, natural gas and electricity. The majority saw merit in waiting, saying there was a cost to acting immediately. The current stance of monetary policy allows more space to tighten than loosen, they said.
The BoE’s forecasts are conditioned on an older market curve showing rates hitting 1% by the end of 2022. That showed inflation dropping below target by the end of the forecast period, a sign that officials think that forward curve for rates in financial markets is too aggressive.
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