Sterling slides after BoE holds rates, cuts growth forecasts

Sterling slides after BoE holds rates, cuts growth forecasts

"Overall, our United Kingdom team noted that given the lower urgency for a rate hike due to the need for "limited tightening" over the forecast horizon, they see an increase in rates contingent on growth bouncing back and negotiations on the Brexit front staying positive, while their call for an August rate hike stands".

The BOE expects an economic expansion of 1.4 percent this year, down from 1.8 percent in February's forecasts.

The pound, which had been up as much as 0.5 percent before the rate announcement, was down 0.1 percent at $1.3534 as of 2:17 London.

To take note of perhaps, some analysts expressed "puzzlement" at the MPC decision's to cut their GDP forecast even while at the same time insisting that weak growth in the first quarter of the year was largely expected to be revised away.

Rate futures showed less than a 50 percent chance of a hike in August, the next time the BoE updates its forecasts.

"It's likely over the course of the next year rates will go up. that's the most likely thing to happen", Mr Carney said in an interview with the BBC, the broadcaster said.

Britain's economy grew more slowly than most of its peers previous year, after a Brexit-driven jump in inflation hit consumer spending power and some businesses delayed long-term investment.

More news: Leaders, aspirants meet over logjam in Ekiti APC's primaries
More news: Angela Merkel Says Europe Would Keep Iran Nuclear Deal
More news: Mets Called For Batting Out Of Order In 1st Inning Vs. Reds

Recent data "had been consistent with a temporary soft patch", most of the BoE's rate-setters said.

Despite weak growth, the BoE sees the need for rate hikes because it thinks the economy could overheat due to long-term weak productivity and lower immigration driven by Brexit. BoE governor Mark Carney said: "The overall economic climate in the United Kingdom looks little changed thus far".

"The only people who throw that term at me are in this room", Carney told the news conference.

"Our UK economists noted that the meeting brought out mixed messages from the BoE". Still, the accompanying comments and the fact that two members of the Monetary Policy Committee - Ian McCafferty and Michael Saunders - continued to advocate for an immediate hike, implies that the prospect of a hike in 2018 is more finely balanced than current market pricing would suggest, noted Lloyds Bank in a research report. 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.

While headline inflation was shown to have risen in line with expectations last month, core inflation remained subdued.

Meanwhile the US dollar found its advance slowed yesterday by the publications of the latest US CPI figures. Inflation has been falling a little faster than the Bank expected it to, and it is now expected to drop down to the target 2% within the next couple of years, regardless of any change in interest rates.