'We're past peak-restrictiveness,' BOE governor says, as bets rise on Christmas rate cut

LONDON — The Bank of England on Thursday voted narrowly to hold interest rates steady, exercising caution ahead of the government's Autumn Budget in November.

Out of the BOE's nine-member monetary policy committee, five members voted to hold the key interest rate, known as Bank Rate, at 4%, while four opted for a 25 basis point cut.

The vote was slimmer than expected with economists polled by Reuters expecting a 6-3 split in favor of a hold.

BOE Governor Andrew Bailey signaled to CNBC that rate cuts are coming, with economists now pricing in a pre-Christmas rate cut.

“We're past peak-restrictiveness, which is what you'd expect given that we've cut interest rates five times [since Aug.2024]. For my part, I feel policy is still restrictive, but it's past peak restriction,” he told CNBC's Ritika Gupta.

As for the timing of the next cut, Bailey said he would be watching inflation and labor market data that'll be released before the last monetary policy meeting of the year, on Dec.18.

“I'll certainly be looking at the rest of this year and the evidence we see between now and our last meeting,” Bailey noted, adding that the MPC would also be able to incorporate Chancellor Rachel Reeves' budget, due Nov.26, into the central bank's assessment.