Bank of England ends run of 14 straight interest rate hikes after cooler-than-expected inflation

cnbc.com:

LONDON — The Bank of England on Thursday ended a run of 14 straight interest rate hikes after new data showed inflation is now running below expectations.

The Bank had been hiking rates consistently since December 2021 in a bid to rein in inflation, taking its main policy rate from 0.1% to a 15-year high of 5.25% in August.

The British pound dropped 0.7% against the U.S. dollar shortly after the decision.

The Monetary Policy Committee voted 5-4 in favour of maintaining this rate at its September meeting, with the four members preferring another 25 basis point hike to 5.5%.

«There are increasing signs of some impact of tighter monetary policy on the labour market and on momentum in the real economy more generally,» the Bank said in a statement.

«The MPC will continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including the tightness of labour market conditions and the behaviour of wage growth and services price inflation.»

The MPC also unanimously votes to cut its stock of U.K. government bond purchases by £100 billion ($122.6 billion) over the next 12 months, to a total of £658 billion.

Investors on Wednesday ramped up bets that the Bank would pause its interest rate hiking cycle after U.K. inflation came in significantly below expectations for August.

The annual rise in the headline consumer price index dipped to 6.7% from the 6.8% of July, defying a consensus forecast that it would rise to 7%, as easing food and accommodation prices offset a hike in prices at the pump. Notably, core CPI — which excludes volatile food, energy, alcohol and tobacco prices — dropped to 6.2% from July's 6.9%.

Early Thursday morning, money markets were split roughly 50-50 on