BoE Statement: Rates kept unchanged at 3.75%, as expected; vote split was 6-3 (exp. 7-2); Greene, Pill and Mann voted for a 25bps hike

COMMENTARY: Governor Bailey: Bailey says underlying disinflation remains in train, while the labour market is easing and demand remains soft, holding Bank Rate is appropriate amid more inflationary global conditions and more benign domestic conditions. Little evidence of second-round effects. Greene: Greene says some second-round effects are likely to emerge and a proactive raise may reduce that probability Mann: Mann says Bank Rate should be above 3.75% and a 25bps raise is appropriate Pill: Inflation risks lie firmly to the upside and raises concern over lasting catch-up effects in wage and price-setting; raising Bank Rate would signal willingness and ability to address inflation upside risks Taylor: Limited fiscal space is contributing to a weak domestic backdrop Ramsden: "two distinct aspects to the outlook".Current restrictiveness is sufficient but a Bank Rate rise may be warranted if upside risks crystallise; would consider resuming cuts if upside risks subside and underlying disinflation continues, with domestic developments pointing to a more benign inflation outlook. Those who voted to Hold: Recognise potential need for additional restraint if material second-round effects emerge; policy strategy could change if inflation upside risks subside durably and underlying disinflation continues Those who voted to Hike: "concerned" that second-round effects could be "material", and a "proactive" hike would guard against this, taking the view that tightening and then "course correcting" is less costly than the alternative. INFLATION:  CPI inflation falls to 2.6% but is expected to rise later this year as higher energy prices pass through BoE judges inflation risks are tilted to the upside relative to the July central projection BoE says risk of material second-round effects rises the longer higher energy prices persist BoE sees little evidence of material second-round effects so far BoE says recent data continue to show clear underlying disinflation Services and food inflation continue to moderate Slowing wage growth and a soft labour market support easing domestic inflation pressures Motor fuel prices contributed 0.6 ppts to June CPI inflation BoE says energy-price risks remain skewed to the upside BoE judges risk of strong inflationary pressures exceeds risk of weak inflationary pressures Global trade diversion is exerting some downward pressure on UK inflation AI-related component demand and El Niño pose upside inflation risks ECONOMY: BoE says loose labour market conditions will reduce inflation over time BoE says higher borrowing costs faced by households and businesses will reduce inflation over time Financial conditions have tightened materially since the Middle East conflict began Most MPC members judge past disinflation is consistent with economic slack BoE says weaker household consumption in its milder scenario would soften demand and inflation pressures GUIDANCE: BoE stands ready to act as necessary to keep CPI inflation on track to meet the 2% target in the medium term BoE says required policy stance will depend on the scale and duration of the energy shock and its propagation through the economy BoE says policy may need to react before inflation persistence risks materialise conclusively