Bank softens stance on interest rate cuts – but Andrew Bailey warns: ‘We’re not there yet’

Instability in the Middle East and an inflationary giveaway Budget from Jeremy Hunt could dash hopes of an early interest rate cut, says James Moore

Bank of England governor Andrew Bailey speaks to reporters on Thursday (PA)

It was a racing certainty that the Bank of England’s rate-setting Monetary Policy Committee (MPC) would on Thursday keep interest rates at 5.25 per cent – the 16-year high that has been causing pain throughout Britain’s economy.

Nonetheless, businesses were eagerly awaiting the MPC’s longer-term signals and the complexion of the vote. For those hoping for an early rate cut (praying, in the case of smaller firms desperate for affordable credit) there might be grounds for some optimism.

First, let’s look at the vote: last time, six backed no change, with the dissenting three favouring a quarter-point rise. This time, six backed no change but only two called for a rise, with one seeking a cut.