1251 GMT - With December's lower-than-expected inflation print having fuelled market expectations for a cut, the Bank of England likely felt it had no other choice Thursday, says J.P.Morgan Asset Management's Zara Nokes. The distribution of votes--7 votes for a 25-basis-point cut and 2 for a 50-basis-point cut--showed high conviction in the call, yet this approach isn't without risks, the global market analyst says in a note. While economic activity is clearly slowing, inflation pressures are not, she says. "Rate cuts might be popular in the short term but, ultimately, there will be a higher price to pay further down the line if inflation is not stamped out now." (emese.bartha@wsj.com)

Eurozone Bond Yields Ease Marginally After BOE Rate Cut

1237 GMT - Eurozone government bond yields ease very slightly after the Bank of England's 25 basis point rate cut, which was widely expected on Thursday, and its signal for more easing to come. The BOE's Monetary Policy Committee's 7-2 vote unexpectedly showed two members voting for a 50-basis-point cut. The 10-year German Bund yield falls to 2.357% after the rate decision, unchanged on the day, but down from 2.364% before the rate announcement, according to Tradeweb. (emese.bartha@wsj.com)

BOE's Unanimous Vote to Cut Signals Trust in Control of Inflation

1237 GMT - The Bank of England Monetary Policy Committee's unanimous vote in favor of cutting interest rates is a clear sign that central bankers see inflation contained, says Morningstar's Michael Field in a note. "Despite the recent uptick in inflation, central bankers feel that at 2.5%, inflation in the U.K. is broadly under control, despite it resting above the bank's 2% targeted level," the chief European strategist says. Further interest rate cuts over the course of 2025 will lighten the load for consumers and businesses alike, he says. (emese.bartha@wsj.com)

Gilt Yields Fall Sharply After BOE Cuts Interest Rates

1232 GMT - Yields on U.K. government bonds fall sharply after all members of the Bank of England monetary policy committee voted to cut interest rates by at least 25 basis points, with two members favoring a bigger 50 basis-point reduction. This is likely to mean a higher possibility of more rate cuts to come. The 2-year gilt yield declines to a 3-month low of 4.074% following the decision, from 4.134% beforehand, Tradeweb data show. The ten-year gilt yield turns negative on the day, dropping to 4.375%, from 4.421% beforehand. (miriam.mukuru@wsj.com)

Sterling Extends Losses After BOE Cuts Rates

1222 GMT - Sterling extends losses after the Bank of England cut interest rates by 25 basis points to 4.5%. The decision was widely expected. However, two members preferred a 50 basis-point reduction, which analysts hadn't anticipated. The BOE said it judges there has been sufficient progress in disinflation and that a "gradual and careful approach" to further rate cuts is appropriate. However, any evidence of long-lasting weakness in demand relative to supply in the economy could push down on inflation pressures and warrant even less restrictive rates. GBP/USD falls to 1.2365 after the decision, from 1.2425 beforehand. EUR/GBP rises to 0.8378, from 0.8341 previously. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

February 06, 2025 10:36 ET (15:36 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.