INSTANT VIEW-Bank of England keeps rates on hold in knife-edge vote

LONDON, Nov 6 (Reuters) - The Bank of England kept rates unchanged on Thursday in a tight decision following recent signs that inflation is slowing, which brought the pound below the highs of the day, while boosting UK government bond prices.

The pound GBP= was last up 0.15% on the day at $1.30725, from around $1.30925 prior to the decision. It weakened a touch against the euro, which was up 0.1% at 88.16 pence, from 87.98 earlier EURGBP=.

British government bond yields fell, with two-year gilt yields last trading at 3.776% GB2YT=RR, down 3.2 basis points on the day and down from 3.802% previously, while the blue-chip FTSE-100 index .FTSE was down 0.1%, having pared some of the day's losses.

COMMENTS:

GEORGE BROWN, SENIOR ECONOMIST, SCHRODERS, LONDON:

"Holding rates today was the right decision, with inflation still nearly double the 2% target. The Bank will be in a stronger position after the dust settles from the budget, armed with additional jobs and inflation data, to judge whether further easing is warranted in December."

"A cautious approach remains appropriate given the risk that high inflation becomes entrenched, due to sticky wage growth and subdued productivity. However, this may change if reports the Chancellor intends to double her fiscal headroom to 20 billion pounds($26.84 billion), through fiscal tightening in the region of 40 billion pounds, are true. Alongside mooted tax cuts on household energy bills, if these measures materialise, they could create scope for the Bank to cut multiple times next year."

MATHIEU SAVARY, CHIEF STRATEGIST, BCA RESEARCH, MONTREAL:

"The BoE opted for a dovish hold. The MPC is not rushed and is waiting for the Treasury’s Autumn Statement, but the labour market is clearly softening and wage inflation is slowing faster than the Committee expected this summer. With fiscal tightening ahead, a December cut remains our base case. We stay overweight gilts.”

($1 = 0.7451 pounds)