Description

All nine members of the Monetary Policy Committee unanimously voted to hold rates at 3.75 per cent at the March meeting. This came as little surprise considering the many unknowns around the length and impact of the conflict in the Middle East. Just a few weeks back, following the February meeting the odds on a rate cut topped 80 per cent, with observers hinting at further downward movements in the coming months. Obviously much has changed since then. But with odds on a reduction in the Bank Rate falling from near certainty to less than 10 per cent in the run-up, market attention shifted to what committee members were saying rather than the decision itself. Some thought (or hoped) the committee would choose to ‘look through’ energy cost driven inflation risk and concentrate on the ongoing weakness in the employment market. But the Bank’s key focus – keeping inflation in check rather than focussing on growth – won out.