BOE Holds Rates at 3.75% but Signals Future Hikes Possible

The Bank of England's Monetary Policy Committee voted 6-3 to maintain bank rate at 3.75%, repeating July's split, with Huw Pill, Megan Greene, and Catherine Mann again backing a 25 basis point increase.

Five of the six members who supported a hold explicitly outlined circumstances that could lead them to vote for tighter policy, as the prolonged Middle East conflict pushes energy prices and the near-term inflation outlook higher. Governor Andrew Bailey said 'policy may have to tighten' if the Middle East conflict persists.

Kallum Pickering, chief economist & deputy head of research at Peel Hunt, said: 'While the meeting decision was in line with our own call and with market pricing, the tone of the minutes has a more hawkish tilt compared to July.'

The pound fell against both the dollar and euro, trading at 1.3356 dollars on Thursday, down from 1.3449 dollars at the same time on Wednesday.