Bank of EnglandGovernorMark Carney said on Thursday that interest rates are likely to rise "over the course of the next year", speaking shortly after the central bank kept borrowing costs on hold in May.
Media captionWhat exactly is the Bank of England interest rate?
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. "With rates still rooted at emergency levels, this is one of the challenges faced by the Bank and how it chooses to deal with this will be key to the success of the United Kingdom economy in coming years". Accordingly, the Bank has trimmed its full year growth forecast (issued in February) down from 1.8% to 1.4%.
The four external members are appointed to bring thinking and expertise from outside the Bank to the meetings.
In Malaysia world's oldest government leader sworn in The stunning election outcome was expected to ruffle financial markets that were expecting a comfortable win for Najib and the BN. Mr Najib, 64, said earlier that he and his wife Rosmah Mansor would go on a holiday on Saturday and would return next week.
Inflation is also expected to be lower in 2018 than expected three months ago, at 2.4% rather than 2.7%. The Inflation Report showed that about one quarter-point hike a year will be needed to return inflation to the goal after the first increase in a decade last November. "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".
"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.
"The prospect of excess demand over the forecast period has reduced the degree to which it is appropriate for the MPC to accommodate an extended period of inflation above the target".
The MPC forecast GDP growth to increase after the weak Q1, which it attributes to temporary factors, especially the poor and prolonged winter weather.
"Survey indicators suggest that growth was somewhat stronger in first quarter than implied by the preliminary estimate", the committee added.
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