Today, the Bank of England announced its latest decision on interest rates and unveiled its quarterly inflation report.
As predictions suggested, interest rates didn’t change and the 2017 growth forecast has risen for the second time in three months.
Interest rates are staying the same
The Bank’s Monetary Policy Committee unanimously voted to leave UK interest rates unchanged at 0.25 percent.
The decision said:
“At this meeting, all members agreed that it remained appropriate to maintain the stance of monetary policy. All members also agreed that, while the committee needed to continue balancing the prospect of a period of above-target inflation with the support that monetary policy gave for activity and employment, there were limits to the degree to which above-target inflation could be tolerated.”
Growth forecasts are up
The growth forecast for the UK economy is up for the next two years.
The BoE expects GDP to rise by two percent this year, higher than the 1.4 percent which was previously suggested, but lower than the pre-Brexit forecast in May, which was 2.3 percent.
This means that the forecast for 2018 has been pushed up, from 1.5 percent to 1.6 percent, but more important that the Bank no longer expects the economy to slowdown due to the Brexit vote.
Real consumer spending is likely to slow
Lack of pay growth and higher import prices thanks to the depreciation in sterling means household income growth is going to pretty weak over the next few years.
However, unemployment forecasts have been revised down, which is a good thing.
This is expect to be 4.9 percent this quarter, with five percent in early 2018 and 2019, compared to the previous forecast in November which had this at five percent, 5.5 percent and 5.6 percent respectively.