Deutsche Bank’s Chief UK Economist Sanjay Raja notes that the Bank of England kept Bank Rate at 3.75%, matching their expectations. He highlights a more divided MPC on paper but a stronger consensus to hold rates, citing improved data, lower wage and price inflation, and an Iran/US deal. Raja expects Bank Rate to stay on hold through 2024, with cuts resuming from spring 2025.

MPC maintains hawkish bias and flexibility

"As expected, the Bank of England kept Bank Rate steady at 3.75% – in line with our call and market expectations."

"First, the MPC may, on paper, be more divided than in April – but there is a stronger consensus to keep Bank Rate on hold for now."

"Second, for the MPC, recent data outturns combined with an Iran/US deal has meant that the risks around second-round effects have receded."

"Third, the MPC has retained full optionality heading into summer."

"We expect Bank Rate to remain on hold through the remainder of the year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)