Bank of England set to keep rates on hold

Bank of England protest

More specifically, the BoE's Monetary Policy Committee (MPC) voted by 6-2 to maintain its benchmark interest rate at the record low of 0.25%.

All sectors want a transitional arrangement, says Carney, stating it's not limited to finance or manufacturing or any other area of the economy.

Since the June MPC, we have heard hawkish Committee member commentary, with the BoE's chief economist and MPC voting member Haldane talk of his likely support for a shift in monetary policy, BoE Governor Carney take a more hawkish stance, the most hawkish MPC member Kristin Forbes depart and Silvano Tenreyro join the Committee.

In its quarterly Inflation Report, the Bank cut its United Kingdom growth forecast to 1.7% for this year, down from 1.9% previously, while growth is now tipped to slow to 1.6% in 2018, down from a previous forecast of 1.7%.

Meanwhile the Euro struggled to advance ahead of the Bank of England's rate decision this morning as data appeared to suggest that the Eurozone economy is beginning to slow in the third quarter.

While growth is running a bit cooler than expected, inflation is a bit hotter in the near term and safely above the Bank's 2% target.

"The chances of a 2017 rate hike now look dead and buried", said Jake Trask, foreign exchange research director at OFX in London.

Quantitative easing was also unanimously kept unchanged at £435bn and corporate bond purchases remained at £10bn.

The meeting minutes noted that if the economic picture evolved as the Bank was predicting, interest rates could be raised by more than financial markets are now pricing in.

But while the pound soared against the dollar, it remained around half a cent away from its lowest levels in nine months against the euro, down 0.1 percent on the day at 89.50 pence EURGBP=D3.

Fabrice Montagne, chief United Kingdom and senior European economist at Barclays, said: "We expect the Bank of England to downgrade its forecast in order to reflect disappointing data. The most striking thing is that they have downgraded the outlook for wages despite lower-than-expected unemployment, and the inflation profile is a bit lower, despite a weaker pound".

And it expects GDP growth to fall back to 1.6 percent next year, down slightly on the previous expectation of 1.7-percent expansion. For 2018 it expects growth of 1.6 per cent, down from 1.7 per cent previously.

Carney on Thursday said that while consumers, in general, had first looked beyond warnings - including by the BoE - that Brexit risked harming the United Kingdom economy, there was no ignoring the fact that sentiment had taken a knock. It also said a bank lending scheme would end as on schedule in February 2018.

GBP/USD remains on the lower ground, around 1.3150. Wage growth was also revised down, with the bank now expecting wages to contract this year by 0.5% on an inflation-adjusted basis.

There were only marginal changes to the latest inflation forecasts from those produced in the May inflation report.

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