Bank of England: Gradual and careful still the way to go

The Bank of England kept its policy rate unchanged at 4.50%, as expected. However, the vote split delivered a surprise, with only Dhingra voting for a cut. The guidance remained untouched, indicating that gradual and careful easing is still the preferred approach. The MPC signals a meeting-by-meeting approach. In May, the MPC will take a closer look at the balance of risks, considering the extent to which policy uncertainty is weighing on demand and the risk of fresh inflation persistence due to the current rise in the headline rate. This assessment will inform their decision. We still forecast a ‘stop-and-go’ cutting cycle with a 25bp cut every quarter, focusing on the meetings with forecasts and a press conference.