BoE Interest Rate Decision : BoE leaves interest rates on hold, as expected

The BoE voted to leave rates unchanged at 4.5%, in line with expectations after reducing rates by 25 bps in the previous meeting. The vote split was 8-1 more hawkish than the 7-2 split that was expected. 1 policymaker voted for a cut.

The central bank signaled that it will keep easing monetary policy gradually in 2025 despite evidence of lingering inflation. Recent inflation data showed that UK CPI rose to 3% YoY in January, up from 2.5%. The recent UK GDP data showed the economy contracted by 0.1% in January. 

This puts the BoE in a difficult spot where higher inflation requires tighter monetary policy but weak growth requires the Bank of England to cut rates to support the economy. These challenges, combined with uncertainty from Trump’s trade tariff support a gradual approach to easing from the central bank. 

The BoE is expected to cut rates again in the May meeting and again in November.

GBP VS DOLLAR (GBP/USD):

If we take a closer look at the technicals, we can observe how price was trading just above 1.2950 before the news release, and post the release we have seen price action push lower into the 1.2970 region. GBP/USD trades -0.24% lower following the decision, recovering from -0.5% prior to the decision. As a result the price has recovered back into the its near term rising channel.

FTSE 100 (UK100):

The FTSE 100 has also seen a direct impact from this BoE interest rate decision, as we saw price trading at just below 8700 before the announcement, and currently we are trading just above 8677. Marking a slight fall of over 0.26%. The FTSE remains within a holding pattern on the 4-hour chart.

Open free account