Bank of England maintains policy rate

Interest rates

Interest rates

The two rate-setters who opted for an immediate quarter-point increase argued that the labor market remained strong, with unemployment at its lowest level since 1975, and noted that wages were growing.

The Bank has also cut its growth forecasts predicting that the economy will only grow by 1.4% this year, down from 1.8% expected just three months ago.

The Bank of England held interest rates on Thursday and said weak growth during a snowy start to 2018 was likely to be only temporary, but it wanted to see a pick-up in the economy in the next few months before raising borrowing costs.

Gross domestic product (GDP) slowed sharply to 0.1%, down from 0.4% in the previous three months, as the impact of the Beast from the East compounded woes in consumer-facing and construction sectors.

For the bloc, investors are now chewing over the European Central Bank's (ECB) latest economic bulletin, although this release mostly reiterated concerns over inflation and global factors whilst remaining optimistic about growth. They still expect to tighten policy at some point this year, though when depends on the evolution of the data. Bank of England officials, including Governor Mark Carney, had appeared to endorse that expectation.

But the decision to keep the bank rate on hold was not unanimous, with two members of the monetary policy committee voting for a hike to 0.75 per cent.

Last November, the bank raised its main interest rate for the first time in a decade, taking back the rate cut it enacted in August 2016, in the immediate aftermath of Britain's surprise vote to leave the European Union.

The Pound (GBP) exchange rate accelerated on Wednesday as it seemed largely unfazed by the rise in geopolitical tensions. The decisions are made after a vote by each committee member; in the event of a tie, the governor has the casting vote.

Thank you for your feedback. The current backdrop of global growth is the most synchronised it has been for nearly ten years and the subsequent spill over from this will inevitably affect the United Kingdom economy. "Markets were then pricing in a 90% chance of a rate rise at this month's policy meeting". In February, Mr Carney said rates might need to rise somewhat faster than markets had expected.

"The MPC's decision was widely expected given the disappointing economic data for Q1 2018, with GDP growth being significantly below expectations and inflation surprising to the downside". The bank's quarterly economic forecasts suggest the next increase may not happen until the latter part of this year, though.

This is due to Brexit, protectionist risks overseas, and recent purchasing manager surveys pointing to sluggish domestic economic activity.

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