Bank of England MPC decision has 'direct implications for every household'

Bank of England MPC decision has 'direct implications for every household'

Bank of England MPC decision has 'direct implications for every household'

Meanwhile regarding the possibility of future rate hikes Governor Mark Carney appeared non-committal as he suggested that rates could rise "faster than the markets expect, but slower than in a traditional cycle".

Rates have now been held at 0.25% since last August, when they were reduced by 25bps amid market volatility after the Brexit vote.

At the last meeting, three rate-setters voted for a hike, but one, Kristin Forbes, has since departed, and has been replaced by the more dovish Silvana Tenreyro.

The Bank also cut its growth forecast down to 1.7% down from 1.9% in May. The Bank now predicts GDP to rise by 1.7% in 2017, 1.6% in 2018 and 1.8% in 2019, down from 1.9%, 1.7% and 1.8% as outlined in the May Report.

Laith Khalaf, Senior Analyst at Hargreaves Lansdown, added: "The Office for Budget Responsibility thinks interest rates will rise to just 1% by 2022, still below the rate of inflation, assuming the Bank of England meets its 2% CPI target".

The Euro has been sturdy enough to prevent the Pound from recovering much this week despite indications that the Eurozone's economy could slow slightly in Q3 2017. Yearly retail sales jumped from 2.4% to 3.1%.

As a result, the pound has fallen by 0.4% against the U.S. dollar to $1.31670, having earlier rallied to a new 11-month high of $1.3267 on the back of the possibility of a shock interest rate rise on Thursday.

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Within a discussion of hours worked and wages, the bank's Quarterly Inflation Report argued that the decline in real incomes since the Brexit referendum could push workers to simply try and earn more by working more to try and remain prosperous.

He said the objective of the MPC was not "the path of interest rates but the stability of inflation in the medium term and subject to that the stability of the economy".

However, two members of the committee - Ian McCafferty and Michael Saunders - voted to raise borrowing costs and the Bank signalled that investors should prepare themselves for more interest rate increases than they now expect.

A Brexit transition deal that reduces access to the customs union and the Single Market will harm the British economy, according to Bank of England governor Mark Carney. The 2018 forecast was lowered from 1.7% to 1.6%.

British inflation is being supported by a Brexit-fuelled slump in the pound pushing up import costs - although the annual rate managed a slowdown to 2.6 percent in June from a near four-year high of 2.9 percent in May.

The Bank today attempted to prime markets that monetary policy may need to be tightened by a "somewhat greater extent" than investors are now anticipating.

The fall in the value of the pound has caused inflation to spike - it is expected to peak at 3 per cent in the autumn.

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