Bank of England holds United Kingdom interest rates at 0.5%

39;Any other decision would now be a major surprise to markets’ Chances of a May rate hike falls to just 8

39;Any other decision would now be a major surprise to markets’ Chances of a May rate hike falls to just 8

If officials unanimously maintain borrowing costs at 0.5 percent, a "dovish hold", the pound could drop toward $1.3350, Patel said.

The pound, which had risen to a high of nearly $1.44 on the expectation of a May rate hike, fell close to $1.35 on the decision.

That was in line with forecasts from economists polled by Reuters in the past week.

Urwin added that as the Brexit rollercoaster is moving forward some benefit from continued growth in the global economy would be felt.

The central bank said on Thursday that inflation had fallen faster than it expected.

Alongside the decisions, the Bank of England also released its quarterly Inflation Report, providing an update on its economic forecasts, predicting that the United Kingdom economy will grow at average of around 1.75% over the next handful of years.

This is largely down to a recent set of figures that showed that the United Kingdom economy grew by just 0.1% during the first quarter of 2018.

"The recent weakness in data for the first quarter had been consistent with a temporary soft patch", the majority of the central bank's MPC said in a statement.

In its May Inflation Report, the BoE revised its projected GDP growth expectations for the second quarter of 2018 down from the February estimate of 1.8% to 1.4%, while predicting inflation will fall to 2.4%, rather than 2.7% as previously forecast.

Sterling reached $1.43 last month on optimism of a May hike; now the pound appears to be pricing in a dovish inflation report and a weak GDP outlook with little prospect for further hikes this year; as a result, the pound was languishing at $1.35 ahead of Super Thursday, after wiping out all of its gains versus the dollar this year.

MUFG's Hardman said the market had "overreacted" in its assessment of the BoE's decision, citing the meeting's minutes that suggested most MPC members saw the need for a rate rise but wanted to see more data before they acted.

A few weeks ago the probability, based on investors' positions in the market, was close to 100 per cent. Traders expect the currency to rally, depending on the outcome of Brexit negotiations; for the moment, most polls still project an orderly Brexit. The near-stalling of the economy has led the MPC to cut its annual growth forecast to 1.4% for this year, although it has left its forecasts for 2019 and 2020 unchanged at 1.7%.

The Royal Institution for Chartered Surveyors said that April saw a slight decline in average prices across the United Kingdom, but but quite big falls in values in London - particularly among homes in the £500k to £1million bracket.

In March, inflation was running at an annual rate of 2.5%, which is above the Bank's target of 2%.

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