The Bank of England is widely expected to cut interest rates to four per cent later today.
Its decision, which will be released at 12pm, will likely highlight the damage to the UK’s jobs market as a key reason for allowing monetary policy to be loosened.
But members on the Monetary Policy Committee (MPC) are likely to disagree on the best course of action, with at least one member to vote for interest rates to be held.
The Bank’s chief economist, Huw Pill, told an audience of bankers and economists that the pace of rate-cutting had to slow down to curb high inflation.
This came after Pill voted against the consensus to hold interest rates at a decision in May.
The Bank opted to keep interest rates at 4.25 per cent at the last decision back in June, although three policymakers – external members Swati Dhingra, Alan Taylor and deputy governor Dave Ramsden – voted for a 25 basis point cut.
Dhingra and Taylor are predicted to vote for a 50 basis point cut at today’s meeting, while most members, including Governor Andrew Bailey, are likely to opt for a 25 basis point cut.
It means the Bank is heading for a three-way split decision, leaving the future of interest rates in the balance.
Economists have largely focused on the impacts of a deteriorating jobs market and price-setting behaviour as factors pulling inflation in opposite directions.
But President Trump’s tariffs, tax rises and erratic energy prices are also weighing on economists’ decisions.
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