The Bank of England (BoE) cut Bank Rate by 25bp to 3.75%, as expected. The 5-4 vote split was also in line with expectations, though markets had probably hoped for a stronger majority after yesterday’s inflation surprise, Rabobank's Senior Macro Strategist Stefan Koopman report.

MPC signals caution on further easing

"There was no signal of a follow-up cut in February. The MPC repeated that Bank Rate is 'likely to continue on a gradual downward path', but warned that decisions on further easing will become a 'closer call'."

"Governor Bailey cast the swing vote, as anticipated. He said the disinflation process is more established, but there is still no 'conclusive evidence' of a sufficient fall in forward-looking wage- and inflation indicators. Both will be key to watch in the weeks and months ahead."

"We expect two 25bp cuts in 2026 and continue to target February and April for those moves. That said, decisions to move remain highly data-dependent."