Bailey Rejects ‘Groupthink’ Claims After Split Vote on Interest Rates

Bank of England Governor Andrew Bailey has firmly denied suggestions of “groupthink” within the Monetary Policy Committee (MPC), following a rare three-way split in the latest vote on interest rates.

“There is no groupthink,” Bailey said in a speech delivered in Reykjavík. “Policy discussions on the MPC are open, frank and lively – as they should be. Expert views are exchanged, assumptions investigated, and questions posed. Three-way splits are not unheard of.”

Bailey was among five MPC members who voted to cut the base rate from 4.5% to 4.25%. Two members pushed for a deeper cut to 4%, while the remaining two voted to keep rates unchanged, highlighting diverging views on how best to steer monetary policy amid economic uncertainty.

The Governor said the split reflects the high level of unpredictability facing the UK economy, and outlined two contrasting scenarios that could shape the outlook.

“In the first scenario, global and domestic uncertainty could weigh on UK demand to a greater extent than in the baseline, in turn easing inflationary pressures,” he explained. “In the second scenario, recent energy price rises could lead to new second-round effects on domestic prices and supply could be more constrained, in turn increasing inflationary pressures.”

While the first scenario could support further interest rate cuts, Bailey cautioned against interpreting these examples as forecasts. “The scenarios are only two examples from many possible paths the economy could take,” he said, noting that events like the pandemic, the energy crisis, the war in Ukraine, and ongoing trade tensions have all made accurate forecasting increasingly difficult.

“Forecasting became much more difficult, irrespective of the specific models and approaches used,” he added. “We need no reminder that the global economic environment is likely to continue to be challenging – and less predictable – than it was in the past.”

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