Bank Holds at 3.75% on 6–3 Split — but Warns Inflation Will Top 4%
The Bank of England held Bank Rate at 3.75% for a sixth consecutive meeting, with Megan Greene, Catherine Mann and Huw Pill again voting to rise. The minutes tilt hawkish: risks “to the upside”, inflation now expected above 4% early next year. Andrew Bailey’s conditionality was explicit: “if the conflict in the Middle East persists for an extended period, as appears to be the case… it is likely that policy may have to tighten.” Markets trimmed November rise odds from 84% to about 64%.
The Bank chose the narrowest ledge available: holding while forecasting inflation at double the target is defensible only on the argument that rate rises cannot refine Iranian crude — and Mr Bailey planted the tightening trigger in plain sight, making future rises the war’s responsibility rather than the Bank’s change of heart. The 6–3 arithmetic is stable but brittle: the three dissenters cited exactly the persistence the governor now concedes, and one more hot print converts them from minority to majority. Against the Fed’s hike the day before and the BoJ’s the day after, Britain is now the hold-out of the hiking season — a position sterling immediately priced at a seven-week low. Watch the November meeting — and the oil price, which Mr Bailey has now formally made his policy instrument.