Bank of England holds rates steady in narrow vote ahead of Autumn Budget

LONDON — The Bank of England on Thursday voted narrowly to hold interest rates steady.

Out of the BOE's nine-member monetary policy committee, five members voted to hold the key interest rate, known as Bank Rate, at 4%, while four opted for a cut.

The meeting on Thursday was the last one before the Autumn Budget later this month. Economists had said that while they believed the central bank was more likely to hold rates steady, it was not a given.

“We can never know for sure which way any meeting will go, but this one is ... one of the hardest to call for some time,” Dean Turner, chief euro zone and U.K. Economist at UBS Global Wealth Management's Chief Investment Office, had said Tuesday.

“It's not a case of whether they will cut interest rates at some point — the answer to that is yes, we believe they will ... if policy is tight, inflation is falling, and growth is lacklustre, then interest rates are going to come down. The hard part is anticipating when,” he added.

Economists had forecast, for the most part, that a majority of the BOE's policymakers would vote to keep its key interest rate, known as Bank Rate, unchanged at 4% at its November meeting.

There were some dissenters, however, with the likes of Barclays, Nomura, Mizuho and Unicredit believing there could be a surprise cut today, to 3.75%. Julien Lafargue, chief market strategist at Barclays Private Bank, conceded Wednesday that while there was a case for a rate cut, it was “a very finely balanced decision.”

In any case, there is a general consensus that rate-setters could trim rates as soon as December, and will cut again over the coming year in response to expected cooling inflation — the rate of which remained unchanged for the third consecutive month in September, at 3.8% — and a softening of labor market data.