BoE Holds Steady as Fracture in MPC Signals Dovish Pivot

The Bank of England (BoE) maintained its benchmark interest rate today, aligning with consensus estimates. The MPC split signals a significant shift toward monetary easing.

A House Divided

While the headline rate remains unchanged, the internal voting dynamics reveal a shifting sentiment among policymakers. The unexpectedly close vote suggests that the consensus for higher for longer is eroding, with a growing faction of the MPC likely viewing current restrictiveness as sufficient.

Market Implications

• GBP/USD: Sterling faced selling pressure as traders adjusted rate-cut timelines.
• Gilts: UK government bond yields saw downside pressure following the BoE update.
• CPI prints: Traders are now scrutinizing upcoming data to confirm the Fed-style pivot trajectory.

Moving forward, the BoE guidance indicates that the path is clearing for rates to fall later in 2026 if GDP and CPI trends persist.