• Prior 4.50%
• Bank rate vote 7-2 vs 7-2 expected (Dhingra, Tenreyro voted to keep rates at 4.50%)
• Continuing to monitor closely the impact of the significant rate hikes so far
• Core goods price inflation has also been much stronger than projected
• But CPI inflation is expected to fall significantly further during the course of the year
• Food price inflation is projected to fall further in coming months
• If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required
• Full statement

The pound jumps on the decision as the BOE takes the more hawkish step, following the hotter than expected UK CPI data yesterday. GBP/USD moving up from 1.2780 to a high of 1.2835 before settling down around 1.2800 at the moment.

The guidance and statement details don’t reflect much of a change to before, which suggests that the the central bank is still on the tightening path. As mentioned earlier, traders had been pricing in either a 50 bps move for today or August so it’s good to have this out of the way now.

The peak rate in terms of OIS pricing remains close to the 6% mark (now 6.05%), just a touch higher than the 5.93% priced in ahead of the decision. As such, there might be limited upside for sterling in this instance; all else being equal.

This article was written by Justin Low at www.forexlive.com.