Bank of England Comment: If not March, then April

The Bank of England’s MPC kept Bank Rate at 3.75% with a surprisingly tight 5–4 split, signalling that a cut may be near. Governor Bailey again proved to be the swing voter and indicated he is open to easing, though any March move will still depend on incoming data. Markets responded by sharply raising the probability of a March cut, in line with our view. With cooling demand, fading inflation risks and a softening labour market all supporting the case for policy easing, the most plausible timing for the next reduction remains if not March, then April.