As widely anticipated, the Bank of England has held base rates at 5.25%, with a vote of 6 to 3 in favour of the status quo.

LCP Investment Partner Paul Gibney commented:

“A big question for 2024 will be if and when the Bank feels able to start cutting rates. Clearly, while inflation remains on a downward trajectory, MPC members believe more evidence of economic softening is needed before any monetary easing is warranted. Wednesday’s surprise announcement that the UK economy had contracted in October was not enough to tip the balance in favour of lower rates.

“While the slowdown may have brought forward the timing of rate cuts, market expectations remain that the Bank of England will cut rates later and more slowly than other major developed market central banks, given the more persistent pricing pressures that the UK economy faces. Exactly when that process starts has no doubt been further complicated by the US Fed’s indication in its post-meeting conference yesterday that it is likely to start cutting rates next year sooner than had previously seemed likely.”