LONDON, Feb 5 (Reuters) - The Bank of England left interest rates on hold at 3.75% in a surprisingly close 5-4 split vote, with Governor Andrew Bailey and external policymaker Catherine Mann saying they could join those pushing to cut borrowing costs at some point.
Below are key comments from the press conference on Thursday.
BAILEY ON FUTURE DIRECTION OF RATES
"Based on the current evidence, bank rate is likely to be reduced further, but judgments around further policy easing will become a closer call."
"On the one hand, cutting of the bank rate too quickly or by too much could lead to inflation pressures persisting, requiring policy to change course. On the other hand, waiting too long to ease policy could come at the cost of a sharper downturn in activity and subsequently inflation, requiring greater policy easing."
"If the economy and the outlook for inflation evolve as we expect, there should be some scope for further easing in monetary policy in the period ahead, but for every cut in bank rate, how much further to go becomes a closer call."
"I think the curve is in a fairly reasonable place, certainly fits with my thinking in this decision, but it doesn't condition in any precise sense, either the timing or the scale of any future moves, because that will depend on how the evidence emerges."
"Today, we are moving into a more settled world where the sort of thinking that you were, you were outlining about, you know, where might the sort of the neutral rate be, becomes much more relevant. So I'm not going to endorse 3.25% but I think, you know, there is a reasonable sort of market curve at the moment, but we'll see where it ends up."
BAILEY ON INFLATION
"Our first key policy judgment (is), that the risk from greater inflation persistence has continued to become less pronounced."
"While wage growth may only be falling slowly, new bank staff analysis provides reassurance that structural changes in wage setting will not keep adding to inflationary pressures."
"We need to see more evidence, in my view, that we're going to get this sustainable return to target. And that really is an issue about what I call underlying inflation."
"Now, I would expect, based on, you know, patterns of history, that, as we start to see and it comes through the data, this, this pattern of inflation coming off...that will feed through into expectations, because that's the way it normally works, and that that is something that will certainly, certainly give me greater confidence that we're on track."
(Reporting by UK bureau)
