No Surprises From the Bank of England
The Bank of England left its key interest rate unchanged this month, as it was expected. In addition, the British central bank decided to leave the asset purchase program unchanged at the level of 435 billion pounds sterling. As the regulator reported on the results of today's meeting, the Bank of England expects a more rapid interest rate increase than anticipated last year, reflecting a stronger global economic growth.
In its quarterly inflation report, the central bank raised its forecast for GDP growth in 2018 to 1.8% from 1.6%, saying that a strong global economic recovery has a beneficial effect on trade in the UK. The British central bank also expects inflation to drop to 2.28% in one year’s time.
The Bank of England raised its rate in November to 0.5% from 0.25%, and this was the first increase in a decade. The central bank explained its decision by increasing inflationary pressures. The announcement made by the central bank today is likely to strengthen investors' expectations that borrowing costs will be raised again in the next months, perhaps in May.