'Super Thursday' or Damp Weekday: Pound slumps on Mark Carney's comments

'Super Thursday' or Damp Weekday: Pound slumps on Mark Carney's comments”

MPC has maintained the forecast on growth at 7.3% and year end inflation estimates at above 4%. The Bank's commitment to record-low rates was supported by 6 members of the board, with the same 2 members opting for an unchanged decision.

At the same time, the bank's governor, Mark Carney told journalists that it is now clear that Brexit uncertainties are weighing "on the decisions of businesses and households" and holding down "both demand and supply". Kristin Forbes, the third member voting in favor of a rate rise during the June meeting, has since departed after completing her term as an MPC voting member.

The comments followed the Bank of England's decision to hold rates at 0.25 per cent as it downgrades its forecast for United Kingdom growth in 2017 to 1.7 per cent, from its previous estimate of 1.9 per cent. For 2018, it expects growth of 1.6 per cent, down from 1.7 per cent previously.

The Bank is concerned that uncertainties about Brexit appear to be putting companies off new investment, despite an increase in profits for exporters following the fall in the value of the pound since last year's referendum.

"Carney's acknowledgement that the sole cause of above-target inflation is the drop in sterling was cited as another dovish comment, despite the fact that policy makers are voting for a hike in spite of this", said Oanda's senior market analyst Craig Erlam.

With low unemployment, wages are expected to rise.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said it was no surprise that the BoE made a decision to hold fire on lifting interest rates given the slowdown in economic growth and consumer spending.

On rates, it said "some tightening of monetary policy" would be needed to cool inflation - set to peak at close to 3% in October - and by a "somewhat greater" extent than markets expect.

The Bank of England has cut its economic growth forecast for this year and next, warning that households will see a fall in their real take-home pay this year and that output growth will remain below its normal expansion rate for some years.

Secondly, there's still no clear transition deal for Britain's relationship with the European Union after Brexit.

In Broadbent's opinion, there was a "trade-off" between keeping inflation in check and promoting economic growth, the BBC reported. "Consequently, inflation remains at a level slightly above the 2% target".

Badiani said the MPC would at this critical stage be wary of a policy mistake which would give a negative jolt to the declining rate of British GDP growth.

The British bank rate has been at 0.25 percent since August a year ago, a record low set with a 25 basis point cut to bolster the economy in case of blowback from the Brexit referendum decision.

United Kingdom inflation is forecast to rise further in the coming months, peaking around 3% in October before gradually dropping to 2.2% over the three-year forecast.

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