Bank Of England Holds-em

Bank Of England Holds-em

The Bank of England's (BoE) Monetary Policy Committee has voted by a majority of 7-2 to maintain the policy rate at 0.5 percent, according to a statement released Thursday.

Until a few weeks ago, the bank was widely expected to raise the main rate by a quarter-point to 0.75 percent, its highest since 2009, when Britain was in its deepest recession since World War II.

The slowdown in the first three months of the year was one of two reasons why the Bank stayed pat.

Mark Carney said the Bank of England still intends to deliver "modest" tightening after an unexpected economic slowdown derailed an interest-rate hike that investors had anticipated as soon as this month. Policymakers Ian McCafferty and Michael Saunders, who again voted for a rate rise, agreed the weak growth so far this year reflected "temporary or erratic factors", but said delaying a rate hike risked more abrupt tightening later on. Carney later told BBC television that interest rates were likely to rise by the end of this year. While the subdued first quarter outturn signified that the full-year growth estimates was lowered, unchanged forecasts for 2019 and 2010 meant that the central bank's broader views on the economy were left intact, stated Lloyds Bank.

The Bank of England is seen in London, Britain, April 9, 2018.

The Bank of England (BoE) has downgraded its predictions for inflation and economic growth in Q2, as the prospects for the United Kingdom economy remain "clouded by Brexit uncertainty".

The four external members are appointed to bring thinking and expertise from outside the Bank to the meetings.

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Thank you for your feedback. The inflation rates of the most import-intensive components of the CPI appear to have peaked.

The Bank believes the economy has the potential to grow at about 1.5% a year but that demand will slightly exceed that limit in the coming years in the absence of a gentle increase in interest rates.

"We fully expect the current scepticism of the BoE's guidance to ebb away, which will provide increased support for the pound as we advance toward the next key policy meeting on 2nd August", said Lee Hardman, FX strategist at MUFG.

"The MPC will monitor these developments closely and react as appropriate to ensure that inflation returns sustainably to the 2% target consistent with its remit".

Bank economists think the first-quarter growth figure was distorted by unusually cold weather and will eventually be revised up to 0.3%.

Two MPC members wanted to increase rates this month, citing the strength of labor market, where unemployment is the lowest since the 1970s and wage growth is picking up, fueling domestically generated inflation.

"Given the recent weakness in consumer credit and the housing market, there was somewhat greater-than-usual uncertainty about the near-term momentum in consumer spending and the extent to which households would adjust their spending and saving to the past fall in their real incomes", the minutes said.