The Bank of England cut interest rates by 25 basis points today, while the European Central Bank stood pat once again.

The Bank of England’s Monetary Policy Committee today voted to reduce the Bank’s repo rate by 0.25 percentage points to 4.5%. Its last move was a rate hike back in August 2004.

CIBC World Markets says the move was expected, “This rate decision will not be a surprise given the weaker economic context of the past few months and considering that the MPC nearly (5-4 voting pattern) eased monetary policy at the July Meeting.”

“In its accompanying statement, the Bank stresses that household spending & business investment growth have slowed. Yet, some other remarks could come across as slightly more hawkish: ‘high oil prices may raise inflation further in the short term’ and ‘further ahead, the rise in equity prices and the recent fall in the exchange rate should boost activity’,” CIBC adds.

“In the meantime though, the Bank notes that ‘the slackening in pressure of demand on supply capacity should lead to some moderation in inflation’ and in that context a 25bp rate cut was judged necessary to keep inflation on track,” it notes. “Overall, no surprise from today’s rate decision. There is nothing in the statement suggesting that another easing is on its way next month, boding well with our own outlook: the next move will be a Q4, not a Q3 story.”

While the BofE finally cut rates, their European counterparts still haven’t been tempted. The Governing Council of the ECB decided to maintain its repo rate unchanged at 2.00%.

“The European Central Bank has prolonged its wait and see approach to monetary policy for the 26th consecutive month in August with the main marginal lending, repo and deposit rates left unchanged, at 3%, 2% and 1% respectively,” CIBC says.

CIBC says that the decision is in line with expectations, so it shouldn’t move markets. The announcement wasn’t accompanied by a press conference, so CIBC says it will have to wait for next week’s August ECB monthly bulletin for an insight on the Bank’s current thinking.

“Given the notable improvement perceived in a wide range of Euro indicators over the past couple of months, we believe that the ECB will be moving a step back from a rate cut scenario,” it says. “In fact, as inflation overshoots the ECB’s 2% ceiling for longer than expected and bearing in mind the latest jump in monetary growth (and medium term inflation implications), we would not be surprised to see the ECB referring to ‘a need for ongoing vigilance, persistent upside risks to medium term price outlook’, etc.”