U.S. economic growth to remain 'sluggish': Bank of England

U.S. economic growth to remain 'sluggish': Bank of England

This is the most viable option because the United Kingdom needs to offset the negative implications of Brexit and depreciation in sterling.

There has been on-going uncertainty over the Government's preferred approach to what kind of transitional arrangements there will be between leaving the European Union in March 2019 and beginning a new trading relationship with the bloc.

A subtle change in language also suggested that the Bank may be increasingly anxious about the chances of Britain securing a smooth transition out of the EU.

Mark Carney's right-hand man said rising inflation and a strong economy could mean a rate hike sooner rather than later. Such a sharp rise reflected sterling's fall from 1.48 USA dollars to the pound on the night of the referendum vote past year to 1.31 US dollars now, having touched as low as 1.22 US dollars in between.

She said: "Uncertainties around the Brexit transition and future UK/EU trading relationships make future interest rates movements less easy to anticipate at present, but this should not discourage businesses and households from preparing for a future with higher rates".

The bank's Monetary Policy Committee voted 6-2 in favour of leaving rates and QE unchanged. "The chances of a 2017 rate hike now look dead and buried", he added.




Alongside its decision to hold rates, Britain's central bank also released its quarterly Inflation Report, providing an update of its forecasts for overall economic growth and inflation. Her replacement, Silvana Tenreyro has voted to keep rates on hold in her first outing.

He said Mr Draghi "has recently begun to talk up the chances of an economic recovery in the Eurozone and of possible tightening of monetary policy in the future - and has led to an overall 15pc gain in the value of the euro versus the U.S. dollar and an 8.5pc rise on a trade weighted basis so far this year". This time, the equivalent forecasts are 1.7 percent, 1.6 percent and 1.8 percent.

He points out that savers have not only seen little to zero gains on their cash, but also an uptick in inflation, which hit a four-year high of 2.9 per cent in May and is expected to peak to 3 per cent in October. Inflation was broadly unchanged, but wage inflation was revised sharply lower, the BOE now expects real wages to fall by 0.5% this year, suggesting that the BOE (along with other global central banks) still haven't figured out how to fix the problem of low unemployment but stagnant wages.

The Bank also increased the total amount of cash it is planning to print to support the economy from £545bn to £560bn. The BoE's 2017 United Kingdom growth forecast was revised lower, from 1.9% to 1.7%.

"As a outcome, the household saving ratio fell from 3.3% to 1.7%, its lowest level since the series began in 1963". We expect inflation to rise by more than the central bank is now predicting, peaking at 3.4 per cent this year.

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