Growth forecasts cut as Bank of England rate hike push fades
The Bank of England cut its growth forecasts yesterday and the only policymaker who had been pushing for a rate hike reversed his position, suggesting rates will stay on hold for the foreseeable future.
BoE Governor Mark Carney said officials still expected the next move in interest rates to be upwards. But he echoed downbeat comments from central banks around the globe, warning that global growth would be modest as emerging economies struggled.
Highlighting risks from China's economic rebalancing and the financial market turmoil, he said risks to Britain were rising even if domestic demand remained strong.
"All of these developments pose downside risks to growth in the United Kingdom via trade, financial and confidence channels," Carney told a news conference.
"The outlook for trade is particularly challenging."
The Bank said its Monetary Policy Committee voted 9-0 to keep rates on hold at a record-low 0.5pc, where they have been for almost seven years.
MPC member Ian McCafferty, who had voted for a rate rise since August, unexpectedly fell into line this week, citing a temporarily weaker outlook for wages.
Central banks around the globe are now paring back growth and inflation expectations. (Reuters)