Far more eye-catching than the Bank of England’s latest decision to hold UK interest rates were the growing calls for a cut in benchmark borrowing costs, from various senior economists and trade union Unite.

It emerged that not one of the Bank of England’s nine-strong Monetary Policy Committee voted for a cut in base rates this week, when the decision to hold them at 5.25% was revealed at noon yesterday. That said, there had probably not been much likelihood that anyone would.

Moreover, the Bank of England flagged the MPC’s view that there were upside risks on the inflation front, while three of the committee, external members Megan Greene, Jonathan Haskel and Catherine L Mann, voted unsuccessfully to raise rates by a quarter-point.

The six to three vote to hold, rather than raise, was a little more clear-cut than the five to four call to stand pat in late September. However, given three members voted for a rise, you can see why some economists believe that base rates may not have peaked yet, even amid the calls for a cut.

Major differences of opinion between the MPC and some economists observing the situation from the outside are becoming increasingly striking.

Also noteworthy is the seemingly growing public awareness of the boost to profits of the big banks from the hike in base rates from a record low of 0.1% in December 2021 to their current level, which has enabled much more lucrative net interest margins.

Given the UK’s appalling cost of living squeeze, it comes as no surprise that the big profits being made by banks are proving increasingly controversial, as households struggle with sharp increases in monthly mortgage costs and other debt payments.

Unite had called on the Bank of England to “cut interest rates and put squeezed workers ahead of…the big four banks”.

Sharon Graham, general secretary of Unite, said: “The Bank of England has been squeezing the living standards of workers while the banks make billions from two years of rising interest rates - this has to stop.”

However, while it is interesting to observe Unite getting into the thick of the controversy on interest rates with an argument that many will think is fair enough, much more remarkable is the call from senior economists for a cut in rates to ward off recession.

A significant minority of economists, 12 of 31, projected a UK recession, defined as two consecutive quarters of contraction for the economy, in a poll by Reuters last month.

The Institute of Economic Affairs think tank said this week that the “shadow monetary policy committee” which it hosts had voted by seven to two to cut base rates. This committee is a group of independent economists.

The IEA, which describes itself as a “free market think tank”, said: “The shadow monetary policy committee…has concluded that the UK risks a recession caused by excessively high interest rates. A majority are now calling on the Bank to reverse course and cut the Bank Rate by 0.25 [percentage points] to 5%.”

It added: “The SMPC is concerned that the UK could significantly undershoot the official 2% inflation target over the coming few years, with a risk of deflation slowing down economic activity.”

Trevor Williams, chairman of the shadow monetary policy committee and former chief economist at Lloyds Bank, said: “There is mounting evidence that the UK’s monetary policy is too tight and could lead to price deflation in a few years and potential recession in the interim. The Bank of England should act now by lowering interest rates.

“The Bank’s overly tight monetary stance is pushing mortgage lending down, companies are struggling to repay debt, insolvencies are rising, and households are withdrawing money to meet higher repayments.

“By underestimating the importance of the money supply, the Bank risks repeating the mistake that caused high inflation. It is essential for the Bank to look through the current level of inflation and focus on where it could be in two years.”

This view from the IEA and Mr Williams was issued ahead of the MPC’s decision being announced.

Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, declared in the wake of the Bank of England’s latest monetary policy announcement at noon yesterday that the case for cuts in interest rates “is only likely to increase”.

He said: “The decision to keep interest rates on hold and the increased number of Monetary Policy Committee members voting for this outcome are further evidence that rates have now peaked.

“While this interest rate hiking cycle may be over, the lagged impact of previous tightening means the protracted squeeze on mortgage [borrowers], businesses and the broader economy is far from over. With the Bank of England expecting the economy to weaken further, the case for interest rate cuts is only likely to increase.”

Former MPC member and eminent economist Danny Blanchflower told an event in June hosted by Glasgow Chamber of Commerce that there was a very considerable probability on the basis of the Bank of England’s own forecasts out to 2026 that there would be deflation.

Mr Blanchflower, who is Bruce V. Rauner ’78 professor of economics at Dartmouth College in the US and a visiting professor at the University of Glasgow, asked: “How can you raise rates with a forecast that says you should be cutting rates? They are out of their minds.”

Base rates were at 4.5% at that point.

However, in Reuters’ poll last month, 16 of 28 economists who answered an additional question said the chance of another rise in base rates this year, from 5.25%, was high.

And the tone from the MPC remains very different to that of those economists talking about a cut in rates.

The Bank of England said yesterday: “The committee continues to judge that the risks to its modal inflation projection are skewed to the upside. Second-round effects in domestic prices and wages are expected to take longer to unwind than they did to emerge. There are also upside risks to inflation from energy prices given events in the Middle East.”

It added: “The MPC’s latest projections indicate that monetary policy is likely to need to be restrictive for an extended period of time. Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures.”

There appears to be little sign of any appetite to cut here.