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The British Pound dipped after three members of the Monetary Policy Committee (MPC) voted to cut interest rates.
That the Bank of England would hold Bank Rate at 4.75% was never in doubt, but that three out of nine members of the MPC voted for a cut was something of a surprise.
Dhingra, Taylor and Ramsden thought it to cut interest rates owing to a slowdown in economic growth and in the face of rising inflation.
The decision casts newcomer Taylor as a bona fide 'dove' alongside Dhingra, whose default setting is to vote for rate cuts. This suggests the balance towards easier policy (faster pace of rate cuts) in the future will be finer than it once was.
For this reason, the initial reaction to the decision was a weakening of the Pound to Euro exchange rate (1.2111). The Pound to Dollar conversion pared an earlier recovery and was quoted at 1.26 in the initial aftermath.
The selloff is relatively contained, which is understandable when we look beyond the vote composition and consider that cutting rates a day after it was reported that inflation had accelerated to 2.6% would have looked curious.
The Bank acknowledged its latest monthly survey which showed that household inflation expectations have increased recently. The same survey also revealed that the public's confidence in the Bank's ability to return inflation to 2.0% had waned.
Credibility would have been damaged by cutting at such a point in time.
Those members who voted for a cut will have leaned on new Bank forecasts for GDP growth to turn out weaker at the end of the year than projected in the November Monetary Policy Report.
Bank economists now expected zero GDP growth in 2024 Q4, weaker than the 0.3% that had been incorporated in the November Report.
Yet, nervousness about inflation trumps all:
"A gradual approach to removing monetary policy restraint remains appropriate. Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further," read the statement.
This reads as being unchanged from the previous statement and suggests that no major shift in stance had yet emerged, with the majority of the MPC clearly resisting any desire by the doves to steer a new course.
For this reason downside to the Pound following the decision looks limited.
An original version of this article can be viewed at Pound Sterling Live