While the Fed continues towards easing, the BoE is taking a measured walk, carefully watching each step. The MPC voting to maintain interest rates signals a decisively cautious approach as inflationary pressures persist in the UK. The recent uptick in inflation to an eight-month high has highlighted that the genie isn't fully back in the bottle, as consumer price pressures refuse to dissipate. With inflation proving more persistent than initially anticipated and economic growth remaining sluggish, the Bank finds itself in a difficult position, trying to strike a balance between controlling price pressures and supporting economic recovery.

However, although the decision to hold rates steady was largely expected, with markets indicating a 90% probability of rates remaining unchanged, the growing dissent within the MPC suggests that change may be on the horizon. Despite six MPC members, including Governor Andrew Bailey, voting to maintain the status quo, three dissenters pushed for a 25bps cut. Furthermore, with a growing trend of global easing putting pressure on the central bank, the balancing act between taming inflation and supporting economic growth becomes increasingly delicate, as there is still a need to assess the full impact of the Autumn budget.

As the curtain falls on 2024, market expectations currently price in at least two 25bps cuts for 2025, down from previous projections, reflecting the ongoing uncertainty surrounding the UK's economic trajectory. However, the OECD expects UK interest rates to settle at 3.5% by 2026, which will still be slightly above the projected rates for the Federal Reserve at 3.25–3.5% and the ECB’s rate, which is forecast to fall to 2% by late 2025.

The question remains whether the MPC doves will manage to outmanoeuvre the hawks in 2025 or if inflation concerns will keep rates higher for longer. Only time will, but for now, the BoE has demonstrated that in monetary policy, it's not always about keeping up with the Joneses – or in this case, the Powell's.