Thursday, 10 May 2018

Bank of England: Interest rates on hold as Bank cuts growth outlook

The Bank of England has said the UK economy has hit a "temporary soft patch" as it kept interest rates on hold at 0.5%.

The Bank cut its growth forecast for the year to 1.4%, down from the forecast of 1.8% made in February.

However, the Bank says that cut is almost entirely due to the disruption to the economy caused by bad weather in March.

It expects the economy to rebound in the coming months.

In a press conference after the rates decision was announced, Bank of England governor Mark Carney said the "underlying pace of growth remains more resilient than the headline data suggests".
As recently as February economists were expecting the Bank to raise interest rates this month.

That view changed after figures released last month showed that the economy grew by just 0.1% in the first three months of the year.

The slowdown was caused by the Beast from the East - severe weather which shut down construction sites, kept shoppers at home and caused transport chaos.

However, the Bank described that as a "temporary soft patch" with "few implications" for the outlook for the economy.

The financial markets are now indicating there will be an interest rate increase towards the end of the year followed by another in 2019, and a further one in 2020.

BBC     News.

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