BoE Rate Decision Exerted Pressure On The Pound
As expected, the Bank of England kept its interest rate unchanged at the current level of 0.5%, amid a slowdown in economic growth in the first quarter. At the same time, the Bank of England still expects that the key interest rate will grow in the coming years. The bank also suggests that the slowdown in the UK economy in the first quarter was probably temporary.
The Bank of England also maintained the volume of the program for the purchase of government bonds at the level of 435 billion pounds ($591 billion) and the volume of purchase of corporate bonds at the level of 10 billion pounds. The British pound lost about 0.5% versus US dollar after the BoE statement.
At the same time, the Central Bank predicts a faster slowdown in consumer prices in the UK, expecting inflation to reach the target level (about 2% per annum) in two years. The forecast for GDP growth for 2018 was reduced to 1.4% from the expected 1.8% in February. In 2019 and 2020, the leaders of the Bank of England still expect the economy to grow by 1.7%.