Inflation Tug-of-War: BoE's Nickel-and-Dime Dilemma

The Bank of England lowered interest rates this Thursday, despite internal disagreements. Four of its nine policymakers expressed concerns over high inflation, aiming to keep rates unchanged, signaling an impending halt to further rate reductions.

Governor Andrew Bailey backed a cut to 4%, reflecting concerns about high inflation and employment instability. A split 4-4-1 vote initially had Alan Taylor, an external committee member, supporting a more aggressive half-point rate cut.

The MPC's decision has stirred market reactions with bond yields rising and stocks falling. Investors are adjusting expectations for further rate cuts, with projected reductions pushed to next year.

(With inputs from agencies.)