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With political turmoil or “Polycrisis” inside Downing Street being the more dominant theme for sterling markets over the past couple of sessions, market participants were not primed for a pronounced shift in bias from the Bank of England’s Monetary Policy Committee (MPC)at their first meeting of the year.

The Bank of England did its Dickensian best to keep the Ghost of Xmas Present onboard with a 25bp cut to 3.75% yesterday, but it remained true to its scrooge-like approach to signalling further interest rate cuts in 2026.

When are they gonna come down, where are they going to land?

Nothing to see here?
There were few surprises from the Bank of England last Thursday with both the decision to hold rates at 4%, along with the 7-2 vote split (Dhingra and Taylor voting for a 25bp cut) widely anticipated.

The Bank of England were not expected to move policy rates at today’s meeting so the focus for markets was on the updated quarterly forecasts for growth and inflation along with the accompanying minutes of the two-day policy meeting.