The Monetary Policy Committee (MPC) faced a difficult decision, balancing a slowing economy against persistent inflationary pressures. The vote was split, with eight members opting for no change and one, Swati Dhingra, voting for a 0.25 percentage point cut to 4.25%. Notably, Catherine Mann, who previously supported a larger rate cut, aligned with the majority.

Luke Bartholomew, deputy chief Economist at Aberdeen, commented: “No surprises from the Bank of England today at least in its decision to keep interest rates on hold.

“However, the vote breakdown was more striking with Catherine Mann having gone from voting for a 50bps cut to now voting to keep policy on hold.

“The Bank has a very challenging economic environment with growth having slowed but inflation pressures remaining elevated. This will keep the Bank on its “gradual and careful” cutting path for now, with another cut likely in May.

“But beyond that, much will depend on trade policy out of the US and the fiscal announcements coming from the chancellor at the Spring Statement next week.”

The bank’s MPC said: “As the committee noted in February, there has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations.

“That progress has allowed the MPC to withdraw gradually some degree of policy restraint, while maintaining Bank Rate in restrictive territory so as to continue to squeeze out persistent inflationary pressures.

“Since the MPC’s previous meeting, global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements, to which some governments have responded. Other geopolitical uncertainties have also increased and indicators of financial market volatility have risen globally. The German government has announced plans for significant reform to its fiscal rules.”