Results of BoE's Meeting Have Sent the Pound Lower
The Bank of England raised interest rate at its today’s meeting, as it was expected. The BoE’s Monetary Policy Committee (MPC) voted unanimously to raise rates by a quarter of a percentage point to 0.75% from 0.5%, which is the highest level since March 2009. The UK central bank also noted, that “any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.”
Despite initially growth, the British pound fell back towards 1.30 against the dollar, 145 against the yen and 1.12 against the euro.
According to the forecast of the Bank of England, the UK economy will grow steadily in the coming years, albeit not very impressive. The Bank also signaled that it would probably be possible to contain inflation by raising rates by one or two times by a quarter of a percentage point until mid-2021.
The Bank of England raised its economic growth forecasts for 2018 and 2019. UK GDP will grow by 1.5% in 2018 and by 1.8% in 2019. Inflation will return to target 2% in 2020. Still, the BoE warned that Brexit could damage the economic recovery.