How does MPC voting work?
Bank of England governor Andrew Bailey (centre-left) alongside fellow MPC members Clare Lombardelli (left) and Dave Ramsden (right), as well as Bank of England communications director James Bell (centre right), following February's meeting.
All nine will vote on a proposed action to take regarding interest rates. That could be to hold them steady, or to reduce the base rate by 25 basis points (the only two realistic possibilities at this meeting). It is proposed by the governor (Andrew Bailey) based on the policy they believe will be supported by the majority of the committee.
If the proposal achieves a majority, that action is passed. In the event of a tie, the governor has the deciding vote.
Most experts predict a 7-2 split in favour of keeping rates on hold at this week’s meeting.
“We are bracing for a 7-2 vote, and forward guidance that acts to dampen expectations for cuts during the remainder of the year,” said Enrique Diaz-Alvarez, chief economist at Ebury.
Inflation remains sticky, reducing chances of a UK interest rate cut
This was in line with the Bank of England’s expectations and slightly lower than the 3.9% some analysts had forecast. But it means that inflation is still running at close to double the Bank’s 2% target.
“Sticky inflation is restricting the opportunity for a fourth rate cut this year from the Bank of England,” said Scott Gardner, investment strategist at J.P. Morgan-owned digital wealth manager Nutmeg. “More progress is required on the inflation front to convince the Bank’s policymakers that a further rate cut is possible in the current economic environment.”
Gardner and others are even starting to doubt whether either of the MPC’s remaining two meetings after this week’s will result in a rate cut.
“Markets have already priced in one further cut by year-end, and whilst November may have offered opportunity for that, there’s a strong case that the MPC will exercise caution ahead of the Autumn Budget, which is shaping up to be a pivotal moment for fiscal policy,” said Steve Matthews, investment director, liquidity at Canada Life Asset Management.
The case for a UK interest rate cut
The UK's labour market is weakening, but a cut to interest rates appears unlikely.
“Theoretically, softer wage data strengthens the case for another round of rate cuts,” said Kevin Brown, savings expert at Scottish Friendly.
But Brown acknowledges that sticky inflation complicates the picture, and says that “interest rates are likely to be on hold until at least spring next year”.
When does the MPC announce UK interest rates?
The MPC’s next UK interest rate decision will be announced tomorrow (18 September) at midday.
Date | Announced |
|---|---|
Thursday 6 November | MPC summary and minutes (including base rate decision), November Monetary Policy report |
Thursday 18 December | MPC summary and minutes (including base rate decision) |
See our calendar of MPC meeting dates for more information.
Experts expect UK interest rates to be unchanged following MPC’s meeting
Good afternoon, and welcome to our live coverage of tomorrow’s decision from the Bank of England’s Monetary Policy Committee (MPC) on UK interest rates.
Andrew Bailey, governor of the Bank of England, following the Monetary Policy's decision last month to cut the UK base rate to 4%.
We will bring you rolling previews ahead of the decision, as well as live coverage and reaction following tomorrow’s announcement.