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Principale » BoE Leaves Its Bank Rate At 0.25%, Maintains Bond Purchases At £435B

BoE Leaves Its Bank Rate At 0.25%, Maintains Bond Purchases At £435B

14 Mai 2017

"I appreciate that there was some mild speculation that it (the vote) could be 6-2 rather than 7-1", said Simon Derrick, head of markets strategy at Bank of New York Mellon, adding that he was surprised at the sell-off in the pound.

However, sterling fell after the bank's announcement as investors speculated that interest rates were unlikely to rise any time soon.

In its latest set of economic forecasts, the central bank estimated that gross domestic product growth in the United Kingdom would increase slightly to 1.9% in 2017, as a pickup in exports and business investment helped offset a squeeze on consumer spending from rising prices.

While inflation, now at 2.3 per cent, would likely peak at close to three per cent in late 2017, the Bank forecast the pound would pick up after the general election. "The UK economy faces major challenges and uncertainty with Brexit on the horizon, a general election, muted productivity, inflation creeping up, lack of real wage growth and huge levels of government and personal debt".

Mr Carney said the Bank now believed Britain's economy would grow by less than 2 per cent in 2017 after a sluggish start to the year.

The bank cut its forecast for average earnings growth for this year to 2% from 3% expected in February.

It said consumers were being squeezed between sluggish income growth and rising inflation, and that could be seen in weak retail sales and a sharp fall in new auto registrations in April.

Most of Carney's press conferences are pretty dry affairs, with the governor being as careful as possible not to say anything too controversial or surprising for fear of unduly influencing the markets.

Suspect in Kirkersville nursing home shooting took two hostages before murders
It wasn't immediately clear how the shooter was taken down, but a report via 10News told of the shooter fatally shooting himself. Of note, Hartless had also been implicated in a case of domestic violence and had been granted early recently release from jail.

Policymakers on the Monetary Policy Committee (MPC) kept interest rates on hold at 0.25% as they nudged down the growth forecast to 1.9% for 2017 from 2% in February after a sharp slowdown in the first three months of the year. It would not take much news on increased growth and inflation for some other policymakers to join Forbes, the BoE said, echoing language from March's meeting.

The inflation outlook suggests the Bank is not expecting sterling to fall further and Carney said the latest economic projections were made on the assumption that there will be a "smooth" Brexit where both a transitional and final deal will be reached.

The MPC said that wage growth has been weaker than expected but should recover.

"If the chance of a transitional deal does begin to materialize, it might well be that the Bank of England brings forward the point at which it raises interest rates, but at the moment, that does not appear to be on the cards".

Minutes of the interest rates meeting showed seven of the bank's Monetary Policy Committee (MPC) members voted to keep rates unchanged.

The growth forecast for 2018 was increased from 1.6% to 1.7% albeit with the assumption that the UK's withdrawal from the European Union will be "smooth".

"The second [issue regarding wages] is that we have expected since the summer of last year that there would be a squeeze on real incomes around this time, and basically over the course of this year", Carney said.

The central bank sees annual inflation peaking in 2017 at 2.8%-well in excess of its 2% target-before easing off in 2018.