No economists polled by Reuters expect the BoE to raise rates on Thursday, and some are getting cold feet about their forecasts for a rate rise in August, which would be only the central bank's second increase since the 2008 financial crisis.
Andrew Haldane joined Michael Saunders and Ian McCafferty in voting to raises to 0.75%, while the six-strong majority sided with holding rates at the current 0.5% rate and leaving quantitative easing unchanged at £445bn. Has he really flipped from aggressive dove to reluctant hawk on the back of a tighter labour market, or is he voting tactically to help underpin the pound at a time when the pound is looking vulnerable against the United States dollar, thus keeping an August rate rise on the table and more importantly on the markets radar. Sterling rallied against the dollar on the news, heading for its biggest daily gain in two months. Now, interest rate futures price in a two-thirds chance of an August rate rise, Societe Generale analyst Jason Simpson said. Up until those comments by the Bank of England governor a rate rise was more or less a done deal and the sudden about turn caught markets on the hop.
"The majority of commentators agree - a rate rise is not an if, but a when". 'Policymakers will, at the very least, want confirmation that the weak first-quarter growth figure was just a blip before raising borrowing costs'.
Household spending and sentiment had bounced back strongly, and a sharp fall in factory output in April could reflect firms running down excess inventory which built up in the period of bad weather in the first quarter, the BoE said.
The Pound's exchange rates have been on a slippery slope this week; versus the US Dollar (GBP/USD) Sterling has declined as low as 1.3102 in today's session, while dropping to levels of 1.1363 against the Euro (GBP/EUR).
"Irrespective of the precise timing of the next interest rate hike, the longer term picture remains one of subdued and gradual rate rises, in the absence of a destabilising economic shock of course".
Mr Haldane was a new addition to the pro-rate hike contingent and this news boosted hopes for an August interest rate hike. This comes at a time of a widening gap with the USA on monetary policy.
Earlier on Thursday, the Bank updated its guidance on unwinding its asset purchases.
For the three calling for a hike, the minutes revealed "these members had a higher degree of confidence that the slowdown in the first quarter was temporary or erratic and would largely be unwound".
The assets purchased by the MPC are now indemnified by HM Treasury.