Carney - rates likely to rise over the next year

Carney - rates likely to rise over the next year

With the United Kingdom inflation decelerating toward the target more quickly than expected in February and the GDP growth slowing down sharply at the beginning of this year, it was no surprise from the Bank of England to keep the Bank rate at the unchanged level of 0.50 percent in May.

In April, Carney sent sterling downwards when he suggested the Bank of England would not rush into a rates hike due to mixed economic messages.

At the latest meeting, seven members voted to keep interest rates on hold and two, Ian McCafferty and Michael Saunders, voted for an increase.

Revealing a glimmer amid the gloom for British household finances, the Bank said that high inflation would abate sooner than previously thought. "Survey indicators, and evidence from the Bank's (regional) agents, suggested that growth had been somewhat stronger in the first quarter than implied by the preliminary estimate". While modest by historical standards, the projected pace of GDP growth over the forecast is nonetheless slightly faster than the diminished rate of supply growth, which averages around 1½% per year. And this is what warrants only very gradual and limited path of interest rate hikes in the UK.

But Carney and co. have previous for teeing markets up for a rate hike then not delivering, most notably just after Carney took over as governor in 2013, and again in 2015. This is good news for borrowers but piles yet more misery on savers.

However, it said growth is "likely to be revised up a little over time" with the labour market remaining "robust".

In individual stock news, ITV's share price has added 4.30 percent to 157.70p after the blue-chip broadcaster revealed a five-percent rise in total external revenue in the first quarter.

Bank of England Governor Mark Carney said the bank's earlier guidance on tighter policy had been conditioned on February inflation projections but the economy had not fulfilled those conditions.

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Cheetham said that hike "now appears to have been more a case of a reversal of the post-Brexit cut rather than the beginning of a sustained cycle of interest rate increases". Britain leaves the European Union on March 29 next year, and there will be a transition period to the end of 2020, but huge uncertainty surrounds the terms of departure, trade agreements and customs arrangements.

How the Bank sees economic growth developing until the first quarter of 2021.

Earlier on Thursday the BoE left rates steady and said weak growth during a snowy start to 2018 was likely to be temporary, but it wanted to be sure the economy was picking up in coming months before raising borrowing costs.

He added: 'However, the Bank is also anxious that the underlying pace of economic growth may have in fact waned so far this year.

Export growth and investment should be particularly important drivers of growth, aided by the weak pound, the Bank believes.

How the Bank now sees inflation playing out over the next three years.

Canadian Dollar exchange rates, meanwhile, continued to draw support from the relative bullishness of the oil markets and the prospect of reduced Iranian crude supplies.

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