A cut takes the Bank Rate from 4.00% down to 3.75%, after the “wait and see” pause in November.

The consensus estimate was for a vote of 5-4 in favor of a rate cut, with Bailey switching to the rate-cut camp. Pricing was fully pointing to a cut as it was 100% priced in.

Yesterday’s CPI print was a major catalyst. Headline inflation fell sharply to 3.2% (down from 3.6%), coming in lower than both market forecasts and the Bank’s own projections. While services inflation remains “sticky” at 4.4%, the overall trend is moving in the right direction.

October GDP figures also showed a surprise contraction of -0.1%. The “V-shaped” recovery everyone hoped for after the Autumn Budget has yet to materialize, leaving the economy looking a bit anemic and unemployment has crept up to 5%.

Cable was trading at 1.3556 just ahead of the decision.