The Bank of England has voted to leave interest rates on hold at 4%, but a knife-edge split on its Monetary Policy Committee suggests a cut may be coming very soon.

The nine members of the Bank’s MPC voted 5-4 in favour of leaving borrowing costs unchanged, in the face of higher-than-usual inflation in recent months.

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The Bank’s chief mandate is to keep inflation – the rate at which prices have changed over the past year – as close as possible to 2% and, all else equal, higher interest rates tend to bring down prices.

However, consumer price index inflation was at 3.8% in September, higher than anywhere else in the G7 group of industrialised nations.

However, unveiling a new set of economic forecasts today, the Bank said it expects inflation has now peaked, and will drop in the coming months, settling a little bit above 2% in two years’ time.

The Bank’s decision comes only three weeks ahead of the budget, which will lead some to suspect that it held off a rate cut so it could reassess the state of the economy post-budget.

The chancellor has signalled that she is likely to raise taxes and trim back her spending plans – something that could further dampen economic growth.

The governor, Andrew Bailey, said: “We held interest rates at 4% today. We still think rates are on a gradual path downwards but we need to be sure that inflation is on track to return to our 2% target before we cut them again.”

The Bank said that, so far at least, tariffs had contributed to slightly lower than expected inflation.

It said it expected gross domestic product growth of 1.2% next year and 1.6% the year after. This is all predicated on the presumption that the Bank brings its interest rates down from 4% to 3.5% next year.

The fact that four MPC members voted for a cut in rates – and the hint from the governor that more cuts are coming – will contribute to speculation that the Bank may cut rates as soon as next month, shortly before Christmas.

Perhaps it’s not surprising that, the day after Guy Fawkes night, the Bank of England held off from lighting any economic fireworks at Threadneedle Street on Thursday.

No interest rate cut. No dramatic change to the economic forecast.

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After all, the budget is coming up in only a few weeks and it threatens to be a very big one indeed, chock full of tax rises and spending cuts that could cast a pall over economic growth. As it usually does when something like that is looming, the Bank chose to pull its head back, turtle-like, into its shell.

But there’s no escaping the fact that rather a lot is going on beneath the surface, both at the Bank and the economy itself. We are, for one thing, reckoning with the consequences of a trade war ignited by Donald Trump, which is already having a far-reaching impact on the flows of goods around the planet.

Global and cyber factors

Consignments that once upon a time would pass from China to the US are now being diverted to other countries with lower tariffs, and there are few countries in the world with lower tariffs, particularly on China, than the UK.

This flood of cheap Chinese imports is becoming a notable economic factor, the Bank said in the Monetary Policy Report (MPR) published alongside its decision on Thursday.

Nor is that the only thing going on beneath the surface. For the first time ever, the Bank has had to reckon with a cyberattack having a bearing on its GDP forecasts, with the Jaguar Land Rover shutdown markedly affecting GDP in recent months.

Food inflation is proving stubbornly high – and not just any food inflation. The Bank’s MPR recounts that “inflation among four components – butter, beef and veal, chocolate and coffee – which make up only 10% of the food CPI basket, is currently contributing nearly two percentage points to overall food inflation”.

Then there are the bigger macroeconomic forces it is trying to gauge.

How worried should it be, for instance, that with inflation at 3.8%, households are increasingly coming to expect that high inflation will persist rather than coming down? How much do those inflation expectations trigger higher wage settlements and, in turn, higher inflation further down the line?

Reasons to cut

On the flip side, the economy is hardly motoring right now. The Bank expects insipid growth of 1.2% next year. This is a long, long way from the government’s stated ambition to have the strongest growth in the G7. And growth is, in part at least, weaker because of higher interest rates.

On balance, it’s hard not to escape the conclusion that were we not a few weeks away from a budget, the Bank would have cut rates. But as things stand, that rate cut, heavily hinted at on Thursday, might have to wait until December or, maybe, February.

Elon Musk is already the world’s richest man, but today he could take a giant step towards becoming the world’s first trillionaire.

Shareholders at Tesla are voting on a pay deal for their chief executive that is unlike anything corporate America has ever seen.

The package would grant Musk, who already has a net worth of more than $400bn, around 425 million shares in the company.

That would net him about $1trn (£760bn) and, perhaps more importantly to Musk, it would tighten his grip on the company by raising his stake from 15% to almost 30%.

The board, which has been making its case to retail investors with a series of videos and digital ads, has a simple message: Tesla is at a turning point.

Yes, it wants to sell millions of cars, but it also wants to be a pioneer in robotaxis, AI-driven humanoid robots, and autonomous driving software. At this moment, it needs its visionary leader motivated and fully on board.

Musk has served his warning shot. Late last month, he wrote on X: “Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me.”

Not everyone is buying it, however.

With so much of his personal wealth tied up in Tesla, would Musk really walk away?

Bad for the brand?

Others see his continued presence and rising influence as a risk. Norway’s sovereign wealth fund, the world’s largest, which owns 1.1% of the company (making it a top 10 shareholder), has already declared it will vote against the deal. It cited concerns about “the award’s size, dilution, and lack of mitigation of key person risk”.

Several major US pension funds have followed suit. In an open letter published last month, they warned: “The board’s relentless pursuit of keeping its chief executive has damaged Tesla’s reputation.”

They also criticised the board for allowing Musk to pursue other ventures. They said he was overcommitted and distracted as a result. Signatories of that letter included the state treasurers of Nevada, New Mexico, Connecticut, Massachusetts, Colorado, and the comptrollers of Maryland and New York City.

All of them Democrats. Republicans have been more favourable. There is a political slant to this.

The signatories’ concerns with his “other ventures” no doubt include the time Musk spent dabbling in right-wing politics with the Republican inner circle. That made him a polarising figure and, to an extent, Tesla too.

Pay packet dwarfs rivals

Combine this with a mixed sales performance and a volatile share price, and some are wondering whether the carmaker has lost its way under his leadership.

Irrespective of performance, for some, the existence of billionaires – let alone trillionaires – can never be justified. Some may also ask why Musk is worth so much more than the leaders of Apple, Facebook, and Microsoft, or Nvidia, the world’s most valuable company by market capitalisation.

Nvidia‘s chief executive, Jensen Huang, received $49.9m (£37.9m) this fiscal year. So, how has Tesla come up with these numbers? Why is Musk’s pay so out of kilter with the benchmark? Does the company have a corporate governance problem?

The courts have suggested it might. Last year, a Delaware court took the view that Tesla’s board members, which include Musk’s brother Kimbal, were not fully independent when agreeing to a $56bn (£42.6bn) pay packet back in 2017.

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The Delaware Supreme Court is now reviewing the case. It is a reminder that even if Musk meets his targets, a similar fate could befall the current package.

The Tesla board is holding firm, however. Robyn Denholm, the company’s chair, told The New York Times: “He doesn’t get any compensation if he doesn’t deliver,” adding that Musk “does things that further humankind”.

Tesla’s valuation is tied up in its promise to deliver revolutionary AI and robotics products that will change the world. Those ambitions, which include robots that can look after children, are lofty. Some would call them unrealistic, but the board is adamant that if they are to become a reality, only Musk can make it happen.

Under the deal, Musk would receive no salary or cash bonus. Instead, he would collect shares as Tesla’s value grows. To unlock the full package, he would have to increase the current market valuation six times to $8.5trn (£6.47trn). For context, that’s almost twice that of Nvidia.

There are other hurdles. The company would have to sell 20 million additional electric vehicles, achieve 10 million subscriptions to its self-driving software on average over three months, deploy one million robotaxis on average over the same period, sell one million AI-powered robots, and boost adjusted earnings 24-fold to $400bn (£304bn).

They are ambitious targets, but Musk has defied the sceptics before.