• BoE lowers rates to 4.75% as inflation drops to 1.7%
• Pound holds in a range in short-term

At its meeting today, the Bank of England (BoE) lowered its main interest ratesby 25 basis points (bps) to 4.75% from 5.00%, following a hold in September and a quarter-point cut in August. The Monetary Policy Committee voted 8-1 to reduce interest rates versus the anticipated 7-2 majority indicated in a Reuters poll and the split vote of 5-4 in August, suggesting a slight dovish tilt.

The economic data has been inconsistent since September. The headline inflation rate dropped to 1.7%, a three-year low, while core inflation remained above 3%. Services inflation fell to 4.9% in September, the lowest since May 2022, but remains high. Retail sales are rising, and unemployment is at record lows.

Given that the Labour government's most recent budget included one of the largest fiscal expansions in recent memory, potentially leading to higher inflation, traders will closely monitor the central bank's policy intentions for the remainder of the year and into 2025.

Pound/dollar rose slightly after the announcement, and is recouping some of the losses that were posted during Wednesday’s session, with major resistance coming from the previous peak at 1.3045.