LONDON: The Bank of England kept interest rates at a nearly 16-year high on Thursday but opened up the possibility of cutting them as inflation falls and one of its policymakers cast a first vote for a reduction in borrowing costs since 2020.

BoE Governor Andrew Bailey said inflation was “moving in the right direction” and the central bank ditched a previous warning that rates could rise again, saying instead that borrowing costs would be kept “under review”.

It was the first time since 2008 that Monetary Policy Committee members had voted for both rate cuts and hikes at the same meeting. Six members voted to keep rates at 5.25%, Jonathan Haskel and Catherine Mann opted for a 0.25 percentage-point hike and Swati Dhingra backed a cut of the same size.

Economists polled by Reuters had mostly expected only one policymaker to vote for a rate rise and for the others to vote to keep rates on hold.

The pound erased earlier losses and investors trimmed bets on the extent of Bank Rate cuts but still saw four reductions in 2024, a view that Bailey said he did not want to challenge.

Bailey said it was too soon to declare victory and getting inflation down to its 2% target would not be “job done” because price growth was expected to pick up again. But he said there was a shift in the BoE’s thinking.

“For me, the key question has moved from ‘How restrictive do we need to be?’ to ‘How long do we need to maintain this position for?’” he told a press conference.

The BoE dropped its warning that further tightening would be required if more persistent inflation pressure emerged.