The Week Ahead (22nd - 26th December) - Dovishness prevails at the Bank of England

This will be a mini-version of The Week Ahead, seeing as almost nothing is scheduled for this week.
Therefore, instead of looking ahead, I’m going to review the Bank of England’s interest rate decision on Thursday.
Bank of England decision
On Thursday, as expected, the Bank of England cut rates from 4% to 3.75%.
It was another tight decision with a 5-4 split on the Monetary Policy Committee.
Decisions have been very close in recent times, and the minutes now include the views of each individual member of the committee.
So how can a rate cut be justified when inflation remains above the 2% target? This is how:CPI inflation has fallen since the previous meeting, to 3.2%. Although above the 2% target, it is now expected to fall back towards target more quickly in the near term. Reflecting restrictive monetary policy, and consistent with evidence of subdued economic growth and building slack in the labour market, pay growth and services price inflation have continued to ease.

In other words: the Bank is basing its decision on medium-term inflation forecasts, not the current inflation rate.
Indeed, the Bank is confident enough in these predictions that it is willing to guide...