Business

Bank of England keeps rates unchanged

Bank of England keeps rates unchanged

Carney later told BBC television that interest rates were likely to rise by the end of this year.

Just weeks after hinting it would raise interest rates, the Bank of England held off doing so Thursday, arguing it was best to wait after an unexpected spell of wintry weather hurt economic growth.

"Rate-setters have kicked the interest rate can down the road once more", Tom Stevenson, investment director for Personal Investing at Fidelity International said. It fell another 0.2 percent Thursday to $1.3500.

"Those looking for interest rate movements should point their gaze to August and November as these meetings are accompanied by the quarterly inflation report".

The cut to the 2018 forecast comes after a shock slowdown in growth to 0.1 per cent in the first quarter as the impact of the Beast from the East compounded woes in consumer and construction sectors.

The Bank expects growth of 1.4% in 2018, down from its previous forecast of 1.8% made in February.

So what is now projected by the bank of England is a "gently rising path for Bank Rate over the next three years". Previously the cost of borrowing had been decided between the chancellor and the governor of the Bank.

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Practically, this largely involves the Bank adjusting interest rates to try and keep inflation at, or as close to, a target of 2%.

"If it were being actively discussed, you'd see it in the minutes (of policy meetings)".

"We would also argue that there is never a flawless time to raise interest rates and expect the MPC to base its policy decisions on how it sees the economy developing in the short-to medium-term".

Further denting the appeal of the Pound were the accompanying industrial production figures, which revealed factory output expanded only 0.1% in March, disappointing markets who had expected production to tick up to 0.2%. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. Though it described the first quarter as a "soft patch" with few longer-term implications, the bank has had to revise down its projection for this year's economic growth to 1.4 percent from 1.8 percent previously.

While forecasts point towards the unemployment rate holding steady at 5.8% the Canadian Dollar could come under pressure if employment levels fall.

"An ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to its target at a conventional horizon", the BOE said. It added that: "The conditions for steady growth had remained in place, the labour market had continued to be strong, and survey indicators had suggested that activity growth would pick up again in the second quarter".


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