The Bank of England remains on hold, but its stance is dovish, with an interest rate cut just a step away.

The Bank of England is just one step away from cutting interest rates, with policymakers voting 5-4 in a razor-thin margin to keep rates unchanged at 3.75%. Previous forecasts showed inflation falling below target, economic growth slowing, and unemployment rising. Bank of England Governor Andrew Bailey once again became the crucial swing voter, choosing to hold rates steady this month after cutting them in December. In a personal statement explaining his decision, Bailey said, "My core expectation aligns with staff's assessment of weak demand." Bailey also stated in another statement, "If all goes well, there is still room to further cut bank rates this year." The decision of the Bank of England's Monetary Policy Committee was significantly more dovish than markets had expected. Earlier on Thursday, as speculation about Prime Minister Keir Starmer's political future heated up, the pound weakened and UK bond yields rose.