Carney - rates likely to rise over the next year

The Bank of England is set to hold interest rates at 0.5% on Thursday as a sharp slowdown in economic growth is expected to put plans for a rise on the back burner

Weak economic data leaves less than 10 per cent chance of interest rate rise

This is partly down to the assessment that part of the sluggish growth over the first quarter of this year was partly related to the bad weather when the "Beast from the East" hit slowing down economic activity. 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.

The quarterly inflation report (IR) noted that CPI had "fallen back more quickly than expected" at the time of the last quarterly report in February.

In its May Inflation Report, the BoE revised its projected GDP growth expectations for the second quarter of 2018 down from the February estimate of 1.8% to 1.4%, while predicting inflation will fall to 2.4%, rather than 2.7% as previously forecast.

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Worse than expected economic performance at the start of the year has led Bank of England's Monetary Policy Committee to hold off on increasing the base rate above 0.5%. The MPC did underline that there were exceptional circumstances presented by Brexit, which is set to occur next March within the forecast horizon that the MPC considers. Q1 growth came in at a desultory 0.1%.

The MPC forecast GDP growth averaging 1.75 percent for each of the years up to 2020.

The announcement comes just weeks after observers seemed nearly unanimous in their predictions of a May rise in interest rates.

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The pound recovered somewhat on Thursday after Bank of England Governor Mark Carney told the BBC that he expected a rate rise over the course of the next year if there were no shocks to the economy.

The Bank of England (BoE) today made a decision to keep interest rates at 0.5% in measured response to relatively weak economic data for 1Q2018.

"It is notable though that the minutes indicate that most MPC members want to see how the economic data evolves over the coming months to make sure that the first quarter slowdown was temporary", said Archer. Quilter Multi-Asset portfolio manager and head of investment, Anthony Gillham, said: "Just a few weeks ago a rate rise was seen as close to certain, with 90% of the market predicting a hike".

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