London is no longer the sole stage for central bank rate meetings! The Bank of England is set to "move north" to Leeds, and the market bets on returning to the rate hike path in November.

According to Zhitong Finance APP, aligning with the current political climate, the nine members of the Monetary Policy Committee will head north to the Bank of England’s office in Leeds, West Yorkshire, to finalize interest rate decisions through discussions. This marks a new chapter for the 332-year-old central bank. According to a person familiar with the discussions, the Committee's first meeting in the North could be scheduled as early as December, but it is more likely to coincide with the vote on March 18 next year.

This latest move by the central bank dovetails with the Bank of England’s long-term plan to expand its northern presence, helping strengthen its ties with regional enterprises, talent, and economic activity.

As of September 22, the pound was trading against the U.S. dollar at around 1.3366, near a two-month low; this follows signals from the Federal Reserve for rate hikes and further tightening, supporting the dollar, while the Bank of England remains on hold for now. It is reported that money market traders currently price in about a 65% probability of a Bank of England rate hike in November, with about four hikes of 25 basis points each anticipated by the end of 2027.

The common thread among major central banks recently has been to guard against persistent price shocks turning into more widespread, long-lasting inflation, while adjusting policy tightening according to their own economic conditions. On September 16, the Federal Reserve unanimously decided to raise interest rates by 25 basis points, bringing the federal funds rate target range to 3.75%—4.00%, based on resilient domestic demand, capital investment, and employment, even as inflation remains high.

On September 10, the European Central Bank announced a 25 basis point rate hike, raising the deposit facility rate to 2.50%, focusing on tackling persistent energy inflation due to the Middle East conflict. The Bank of Japan, meanwhile, passed a rate hike by 7 to 2 votes on September 18, raising the policy rate to 1.25%, effective from September 24; yen depreciation, rising energy and some AI-related product prices, and the pass-through of wage costs to selling prices have all heightened their concerns over inflation.

The Bank of England has adopted a more cautious pace: according to the decision published on September 17, the Monetary Policy Committee voted 6 to 3 to keep the interest rate at 3.75%, with the other three members supporting a 25 basis point hike. The UK’s inflation rate picked up to 3.1% in August, but the labor market remains somewhat weak, and there is still no obvious second-round effect of inflation in wage and price setting, so most members chose to continue observing. From a policy transmission perspective, rate hikes mainly constrain demand and stabilize inflation expectations to prevent energy price rises from further becoming entrenched into wages and service prices. Different countries’ economic resilience, the speed of cost pass-through, and financial conditions determine the differing pace of this round of anti-inflation action.

From Threadneedle Street to Leeds, Bank of England rate decisions will no longer always be made in London

Except for remote meetings during the COVID-19 pandemic, since the Bank of England gained monetary policy independence, UK rate setters have always convened in London to make decisions. From next year, the “Old Lady of Threadneedle Street” will split this responsibility between London and Leeds.

Aligning with the current political climate, the nine members of the Monetary Policy Committee will head north to the Bank of England’s office in Leeds, West Yorkshire, to finalize interest rate decisions through discussions. This marks a new chapter for the 332-year-old central bank. According to a person familiar with the discussions, the Committee's first meeting in the North could be scheduled as early as December, but it is more likely to coincide with the vote on March 18 next year.

The Monetary Policy Committee’s decision to embark on this symbolic journey coincides with Prime Minister Andy Burnham’s push to shift policy focus to northern England, including setting up a “No. 10 Downing Street North Office” in Manchester, where he has served as mayor for nearly a decade. However, the Bank of England’s links to Leeds date back a long time; the first local branch opened there in 1827.

In 2021, when Burnham’s premiership was still a distant idea for most British voters, the Bank of England announced plans to establish a Northern Hub and moved into larger offices two years later, aiming to expand the team to 500 people by 2027. Earlier this week, the Bank of England stated it would move into a new office at Capitol House in Bond Court in 2028, continuing its plan to have one-tenth of its workforce based in the city.

According to the plans, the Monetary Policy Committee will only hold meetings in Leeds for rate decisions that do not involve the release of a full set of economic forecasts, as those meetings require more reports from London office staff. The Committee holds eight meetings each year, with four coinciding with new forecasts.

Monetary Policy Committee members regularly travel across the country to gather economic information from businesses and other contacts, supplementing what they learn through the Bank’s regional network. However, up to now, rate decisions have always been made in the Committee’s meeting room at the Bank’s protected, historic building in the City of London.

When Bank of England Governor Andrew Bailey announced the new office arrangements this week, he said it was “an important milestone in our long-term commitment to this city.” Tracy Brabin, Labour Mayor of West Yorkshire, said the decision was “a strong recognition of our ‘Northern Financial City’ and shows national confidence in the region’s economic future.”