Bank of England workers on strike for first time in 50 years

Bank of England

Bank of England

Governor Mark Carney said: "Investment has been weaker than we otherwise would have expected in a very strong world".

In its quarterly inflation report, the Bank cut its forecasts for growth to 1.7 per cent this year, down from 1.9 per cent, and 1.6 per cent next from a previous estimate of 1.7 per cent.

The U.S. dollar weakened against a basket of major currencies after weaker-than-expected U.S. services sector data anxious investors ahead of the jobs data and stoked doubts that the Federal Reserve would raise interest rates again in 2017.

In broad terms, the Bank's inflation forecasts remained similar to the last set: the CPI rate is set to rise to close to 3% in the coming months, and will remain above its 2% target all the way through to 2020.

The bank issued a statement which said it had been in talks with the union, "and remains ready to continue those talks at any time".

Sir John said it was not the Bank's job to "resist" rebalancing towards exports by trying to boost consumer demand with low interest rates.

The BOE's forecasts continue to assume a smooth Brexit and are based on a rate hike fully priced in by the third quarter of 2018. Most economists expect a 6-2 vote, unless Haldane changes his vote to give another 5-3 result. That means markets are likely to concentrate on the forecasts for the economy which are expected to be downgraded.

The Bank of England joined other major central banks Thursday in signaling that a long era of easy money is gradually drawing to a close, saying that it anticipates raising interest rates in the U.K.at a faster pace than investors now expect. Inflation projections were slightly revised upwards for the current year to 2.7% on an annual basis from 2.6% before, while the central bank's expectations for annual inflation in 2018 remain at 2.6%. Ian McCafferty and Michael Saunders, both external members of the MPC, voted to hike.

It also now sees 2018 growth of 1.6%, compared with 1.7% previously.

Laith Khalaf, senior analyst at Hargreaves Lansdown said: "The UK economy is faltering and consumer purses are under pressure, so it's no surprise the Bank of England has decided not to upset the applecart by raising interest rates".

This may imply more interest rate rises - though few economists expect any change this year.

"This is fairly non-committal language and didn't convince the FX market that the BOE is serious about hiking, especially since the hawkish contingent lost one of its members at this meeting - Kirsten Forbes left in June and her replacement, Silvana Tenreyo, didn't follow her footsteps instead choosing to vote with the pack".

Policymakers agreed however to increase cheap lending for retail banks before the expiry of the Term Funding Scheme next February.

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