BoE holds rates but policy split widens
February rate cut now looks more likely analysts
Shortdated gilts win reprieve from dovish tone

LONDON, Dec 19 Reuters A dovish message from the Bank of England on Thursday dented the outlook for sterling, one of the year39;s best performing major currencies against the dollar, while bringing a reprieve to Britain39;s battered government bond markets.

The pound slipped and twoyear gilt yields pulled back from sevenmonth peaks after the BoE held its key interest rate at 4.75, as expected, but three policymakers voted to lower borrowing costs.

Analysts said the surprise vote split highlighted the risks of British interest rates falling faster than anticipated next year a development that could weigh on sterling but shore up bond markets.

Data this week showed growth in British wages sped up in the three months to October and inflation rose to an eightmonth high of 2.6 in November, seemingly cementing the case for the BoE to lower rates only gradually next year.

Yet growth has stalled. Britain39;s economy shrank for a second month in a row in October.

The Bank of England will follow the ECB in 2025. They can easily afford to lower rates progressively, said Florian Ielpo, head of macro at Lombard Odier in Geneva, referring to the European Central Bank.

We39;re in dire need of a recalibration of monetary policy because policy globally, the level of riskaversion, is more consistent with the inflation we had two years ago than…