Bank of England keeps interest rate on hold as economy slows

Posted May 12, 2018

Tom Stevenson, investment director for personal investing at Fidelity International, explains: "Until a few weeks ago, a further quarter point rate hike to 0.75% looked nearly guaranteed".

That was in line with forecasts from economists polled by Reuters in the past week.

As The Bank of England Governor Mark Carney explained during the press conference, that the United Kingdom households and business all expect the Bank rate to rise slightly in three-year time, but they all are more anxious about the actual outcome of the Brexit negotiations as the future path for the policy rate will be up, with move only gradual and limited.

Canadian Dollar exchange rates, meanwhile, continued to draw support from the relative bullishness of the oil markets and the prospect of reduced Iranian crude supplies.

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

The double top pattern (depending upon the highs/lows used as a baseline) calls for price to return to the October and November 2017 lows near 1.3027.

In recent months, the prospect of an interest rate rise by the Monetary Policy Committee (MPC) has been considered an nearly sure thing.

The pound USA dollar exchange rate is now at around $1.353.

The Governor of the Bank of England, Mark Carney, speaks at an event at the Bank of England in the City of London, London, Britain April 27, 2018. But "there was value in seeing how the data unfolded over the coming months", they added. And the ECB or the Bank of Japan are still far to get to the point of talking about higher interest rates, but when they do, they are likely to face the same issues.

"The tone of the MPC minutes and the forecasts contained in the May IR point very much to the BoE delaying rather than abandoning a gradual tightening of monetary policy", Dr Howard Archer chief economic adviser to the EY ITEM Club, told Xinhua.

The Bank of England has backed away from raising interest rates following a sharp slowdown in growth.

This shouldn't really be a surprise when on the one hand you chide markets for underestimating the likelihood that rates could rise faster than expected earlier in the year, only to row back on that within the space of three months.

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.

"Rises in US interest rates are pushing the dollar higher", said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank, noting that investor sentiment is stronger now than in February when worries about higher rates hit stock prices.