The three-way split seen in Monetary Policy Committee (MPC) voting on how best to proceed with interest rates indicates ongoing debate in the Bank of England about how best to proceed with UK monetary policy, according to Handelsbanken.
At its meeting ending on 2nd August 2023, the MPC voted by a majority of 6–3 to increase Bank Rate by 0.25%, to 5.25%.
Two members preferred to increase Bank Rate by 0.5%, to 5.5%, and one member preferred to maintain Bank Rate at 5%.
James Richard Sproule, chief economist UK at Handelsbanken, said he expects to see rates increase again in September but believes that will be the peak of this cycle.
He said: “The Bank of England’s (BoE’s) Monetary Policy Committee (MPC) has today raised interest rates by 25bp to 5.25%, in line with consensus.
“The MPC voted in a three way split, with one member voting for no rise (the dovish Dhingra), two members voted for 0.5% (Mann and Haskell), and the majority voted for 0.25%, including the newest MPC member Megan Greene (who has replaced the dovish Sylvia Tenreyro).
“We now expect a further interest rate rise of 0.25% in September to 5.5%, which we are forecasting will be the peak of this interest rate cycle (market consensus is that the peak will be 5.75%). We are forecasting gradual easing in 0.25% steps from mid-summer 2024.”
