Bank of England Struggles to Find Policy Consensus – Currency Thoughts

Bank of England Struggles to Find Policy Consensus

August 7, 2025

On the Bank of England’s Monetary Policy Committee, officials are grappling with a recent reacceleration of inflation but also sluggish growth and higher unemployment. The Committee initially split 4-4-1 with a four-person minority including the bank’s chief economist favoring no change in the former 4.25% Bank Rate, matched against a group of four votes including Governor Bailey’s in favor of a 25-basis point cut to 4.0%. There was also one committee member, Taylor, who voted initially to cut the rate more steeply to 3.75%. An unprecedented second vote in search of a majority consensus split 5-4 in favor of reducing the interest rate by 25 basis points to 4.0%, its lowest level since August 2023. This is the fifth such cut so far, each being aligned with quarterly publications of the Monetary Policy Report. Today’s statement asserts, “the timing and pace of future reductions in the restrictiveness of policy will depend on the extent to which underlying disinflationary pressures continue to ease. Monetary policy is not on a pre-set path.”

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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