United Kingdom economy 'resilient' despite recent slowdown


GDP growth is seen at 1.7% each in the next three years.

"Despite a run of soft data, the economy may turn out to be more robust than recent evidence, and the Bank's newly lowered forecasts, suggest", he said.

Mark Carney, the governor of the Bank of England, and his eight rate-setting colleagues are striving to become more predictable in signaling when Britain's interest rates will rise again.

Recent data "had been consistent with a temporary soft patch, with few implications for. the outlook for the United Kingdom economy", most of the BoE's rate-setters said.

"The committee's best collective judgment therefore remains that, were the economy to develop broadly in line with the May inflation report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to its target".

Sterling fell on the news and was trading lower by 0.2% against the United States dollar at 1.35. It was down 0.2% at $1.3527 as of 12:58 pm in London. It said this would come in the form of two 0.25% rate hikes, believed to be in May and November.

The Bank of England has put back plans for an increase in interest rates after the weaker-than-expected performance of the economy in early 2018.

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Chris Williamson at IHS Markit added: "The unchanged medium term outlook leaves expectations alive for rates to rise later in the year, likely August".

"Timing of the next BoE rate hike remains highly data dependent and we see market pricing as fair for now, with risks skewed to the upside for United Kingdom yields in the coming months, if we are right in our call that the BoE will hike the Bank Rate in August". Carney has been labeled an "unreliable boyfriend", having already in the past flagged up a rate hike only to back out later.

"They expect us not to be on some pre-set course".

Carney defended himself against that charge, arguing that when the situation changes, the bank's policy response has to change. In the year to March, annual consumer price inflation was 2.5 percent, well below the bank's projection of nearly 3 percent.

Economists had previously expected two rises in 2018 alone.

The second reason the central bank opted against another rate increase is that inflation has fallen more than anticipated.

In comments after the bank held its main interest rate at 0.5 percent, Carney said the sharp economic slowdown witnessed in the first quarter was likely a temporary phenomenon related to the bad weather that gripped much of the country.