Bank of England to hold rates after data downturn

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But instead, following some more recent signs of weak economic performance, including gross domestic product growth of only 0.1% in the first quarter of the year, the nine MPC members voted 7-2 to hold rates where they are.

Moreover, subsequent surveys of business and consumer activity showed little rebound in April - adding support to the view of Britain's statistics agency that the slowdown in first-quarter growth to 0.1 percent was largely unrelated to the weather. Britain's economy grew more slowly than most of its peers past year, after a Brexit-driven jump in inflation hit consumer spending power and some businesses delayed long-term investment.

The Bank of England will wait until August before raising interest rates, according to a Reuters poll in which almost all economists pushed back previous expectations of a hike on Thursday.

Two members of the committee, Ian McCafferty and Michael Saunders, voted to increase rates to 0.75 per cent.

Most experts now believe that an interest rate rise is unlikely until the summer.

CPI Inflation now sits at 2.3% and earlier predictions of solid economic growth through this year had led many to expect the Bank to vote to increase the base rate from 0.5%, where it has been for much of the past 8 years, bar a dip to 0.25% during 2017.

The base rate is the "rate of interest [paid] on reserves held by commercial banks at the Bank of England".

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He argued that the "underlying pace of growth remains more resilient than the headline data suggest", though the bank still had to revise down its forecast for this year's growth to 1.4 percent from 1.8 percent.

Carney defended himself against that charge, arguing that when the situation changes, the bank's policy response has to change.

"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 Bank has described recent disappointing economic data as a "temporary soft patch", implying rates will rise in the fullness of time (with interest rates near an all time low, this is one of the safest of bets and only a question of timing).

"We fully expect the current scepticism of the BoE's guidance to ebb away, which will provide increased support for the pound as we advance toward the next key policy meeting on 2nd August", said Lee Hardman, FX strategist at MUFG.

As in February, the MPC pointed to the fall in unemployment to its lowest level since the mid-1970s as the reason why rates would eventually have to rise.

"If the Bank of England does cut the near-term GDP growth and inflation forecasts, but leave the longer-term projections unchanged, it would point to the gradual tightening of monetary policy being delayed rather than abandoned", he said. The BoE said the economy would grow by 1.4 percent this year, down from the 1.8 percent it predicted in February, with slowing consumer lending and a sluggish housing market creating greater-than-usual uncertainty about consumer demand.