STORY HIGHLIGHTS


BOE cuts growth forecast

CNC
Added On May 12, 2018

The Bank of England said the UK economy has hit a "temporary soft patch" as it kept interest rates on hold at 0.5 percent.
 
As well as holding interest rates, the Bank also slashed its growth forecast for the year to 1.4 percent, down from the 1.8 percent predicted in February.
 
The Bank says that cut is almost entirely due to the disruption to the economy caused by bad weather in March.
 
In a press conference, bank governor Mark Carney remained upbeat, saying the "underlying pace of growth remains more resilient than the headline data suggests".
 
As recently as February economists were expecting the Bank to raise interest rates this month.
 
That view changed after figures released last month showed that the economy grew by just 0.1 percent in the first three months of the year.
 
The slowdown was caused by the severe weather which shut down construction sites, kept shoppers at home and caused transport chaos.
 
However, the central bank described that as a "temporary soft patch" with "few implications" for the outlook for the economy.
 
The financial markets are now indicating there will be an interest rate increase towards the end of the year followed by another in 2019, and a further one in 2020.