KPMG UK comments on today’s Bank of England rate decision

"The Bank of England opted to keep interest rates unchanged in a narrow 5-4 vote split, breaking its pattern of easing during forecast meetings. The close vote and broad range of views on the MPC underscores the uncertain backdrop policymakers are navigating ahead of the Budget.

“The data flow over the past few months has been positive, with inflation coming in below the Bank’s expectations and the labour market continuing to loosen. However, this was not enough to sway a majority of MPC members to lower interest rates. Despite the recent favourable outturn data, the Bank’s medium term projections for inflation were broadly unchanged from the August meeting, suggesting risks to the outlook remain balanced.

"Despite today’s decision to keep interest rates unchanged, the narrow vote split and the more dovish tone in the minutes suggests the door remains open for a rate cut at the December meeting. Key data releases on inflation and the labour market, in addition to more clarity on fiscal policy following the Budget, will likely be enough to persuade a majority of MPC members to vote for a rate cut. We expect base rates to fall to 3.75% by the end of the year.”