The Bank of England has maintained its guidance for “gradual” interest rate cuts next year, following surprise support for a reduction this month.
Its rate-setting committee, while deciding to keep Bank rate on hold at 4.75%, noted higher than expected wage rises and inflation despite a slowdown in the economy over the second half of the year.
However, three members backed a cut, meaning the vote came in at 6-3 in favour of no change.
Just one dissenting voice had been expected.
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Governor Andrew Bailey said: “We think a gradual approach to future interest rate cuts remains right, but with the heightened uncertainty in the economy we can’t commit to when or by how much we will cut rates in the coming year.”
He later said in an interview: “I think the path is downwards but… we’ll come back at our next meeting in February and review it again.”
Earlier this month, Mr Bailey voiced concerns about how businesses would react to budget measures, such as the hike to employer national insurance contributions from April.
Lobby groups and many individual firms have warned the additional costs will be passed on – risking further inflationary pressure.
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Business reacts to shrinking economy
Mr Bailey also noted a worry tit-for-tat trade tariffs would add to the acceleration in price growth. US president-elect Donald Trump has warned of tariffs covering all US imports as part of his agenda to protect US industry and jobs.
The Bank said on Thursday it was still evaluating the effects of the budget on the outlook.
It has also consistently spoken of the threat to rate cuts…
