Bank of England: Revealed preference

The Bank of England left Bank Rate unchanged at 3.75%, as expected. While the 6-3 vote split looked hawkish, the three dissents were driven by quite different concerns rather than a shared diagnosis of the economy. More importantly, the six members who voted to hold seem willing to tolerate inflation around 3% for now, as long as second-round effects remain limited and domestic conditions continue to soften. Bailey reinforced that message in the press conference, making clear that the Bank is not moving towards a hike. Oil prices remain the key swing factor, but the bar for tightening in September still looks high. Market-implied odds of a hike have fallen to around 30% from roughly 50% before the meeting. We continue to expect no hikes.