Bank's interest rate decision heaps more pain on Reeves

If Rachel Reeves were more like Donald Trump, she’d be railing against the Bank of England right now, and especially its governor Andrew Bailey.

- JAMES MOORE

Make no mistake, Andrew Bailey was the swing vote who ensured that the hawks carried the day in a 5-4 split vote of the Bank’s Monetary Policy Committee (MPC) that left base rates at a restrictive 4 per cent - in other words, holding. The decision denied Reeves what would have been a very handy spoonful of sugar to make the bitter pill of a tax-raising budget go down a little easier.

Reeves’ first appointment to the MPC, external member Alan Taylor, did his bit for her by remaining in the doves camp, as did their spiritual leader Swati Dhingra. Joining them were Dave Ramsden, Bank deputy governor for markets and banking, and Sarah Breeden, deputy governor for financial stability.

On the other side were the longtime external hawks Catherine Mann and Megan Greene, along with the Bank’s chief economist Huw Pill, who has made his position very clear in recent speeches, and Clare Lombardelli, the deputy governor for monetary policy.

Bailey carried the day for this group, who all fear that more work needs to be done to kill Britain’s inflationary dragon, with the headline rate sitting at an uncomfortably high 3.8 per cent when compared to the MPC’s 2 per cent target.