The Bank of England has kept interest rates on hold at 0.5% and cut its growth forecast for this year.
The Bank expects a growth of 1.4% in 2018, compared with the previous forecast of 1.8% in February.
However, the Bank says that the cut is almost entirely because of the damage to the economy caused by the bad weather that hit the country in the month of March.
Expects a rebound in the coming months, and notes that unemployment remains low.
Recently, in the month of February, economists expected the Bank to raise interest rates in May, but that view has changed after the data released last month showed that the economy grew only 0.1% in the first three months of the year.
The slowdown was caused by the so-called Beast from the East – the bad weather that shut down construction sites, required to home buyers and has caused transport chaos.
However, the Bank has been described as a “temporary soft patch” with the “few” implications for the outlook for the economy.
The financial markets are now indicating that there will be a rise in the interest rate, towards the end of the year, followed by another the next year, and another in 2020.
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The movements of the Bank’s official interest rate can have a big effect on families in the UK. An increase would mean that about four million households with variable or tracker rate mortgages should see an increase in their monthly payments.
However, it would give the nation’s 45 million savers, the elevator would probably see to improve the interest income. In addition, anyone shopping for an annuity, their pension would be likely to see the best offers.Wait and see
Bank of England governor Mark Carney sets interest rates with a team of eight other experts who form the Monetary Policy Committee (MPC).
In the course of the last meeting, seven members voted to keep interest rates on hold and two, Ian McCafferty and Michael Saunders, has voted for an increase.
The minutes of the meeting show the MPC wants to wait and see how the economy performs in the coming months.
While you’re waiting to recover from a weak start to the year, there is the risk that the slowdown could be more persistent.
“At this meeting, the costs of waiting for additional information were likely to be modest,” the minutes from the meeting, he said.
The course of interest rates depends on the inflation falling in line with the Bank’s expectations.
In the month of March, inflation is running at an annual rate of 2.5%, which is above the Bank’s target of 2%.
But in its latest Quarterly Inflation Report, the Bank charges of the above-target inflation on a rise in prices of imported goods caused by the weakening of the lira.
The Bank expects the effect to fade in the coming years, bringing inflation to 2% by the beginning of 2021.
It is also expected that the unemployment rate is expected to fall further, to 4% by 2020, the Bank’s lower forecast due to the financial crisis.