LONDON: Bank of England policymakers voted 6-3 to keep interest rates on hold on Thursday, a bigger split than economists had predicted as officials disagreed over how to respond to a slowing economy that remains beset by inflation pressures. Deputy Governor Dave Ramsden and the newest Monetary Policy Committee member Alan Taylor unexpectedly joined long-time dove Swati Dhingra in voting to cut rates by a quarter point to 4.5%.

Sterling fell and British government bonds recouped some of their losses caused by Wednesday’s US Federal Reserve meeting, as investors judged the BoE might cut rates marginally faster than previously thought. But Governor Andrew Bailey - who voted with the majority to keep rates on hold at 4.75% - said the central bank needed to stick to its existing “gradual approach” to cutting rates.

“With the heightened uncertainty in the economy we can’t commit to when or by how much we will cut rates in the coming year,” he said. Britain’s economy contracted in September and October, the first back-to-back shrinkage since the COVID-19 pandemic, with much of the blame pinned on the new government’s announcement of 25 billion pounds ($31 billion) of tax increases for employers.

Economists polled by Reuters last week forecast the BoE would cut rates four times next year.—Reuters