BoE holds rates at 0.25% but further cut possible later this year

The hold on interest rates was widely anticipated however a further cut is expected by November.

However, although these economic indicators were stronger than anticipated, the Committee said its view of “the contours of the economic outlook following the European Union referendum had not changed”.

The BOE, and particularly Carney have faced significant criticism from certain sections of British politics in recent weeks for those predictions.

There was greater optimism surrounding the growth outlook with comments that a range of indicators of near-term economic activity had been somewhat stronger than expected, while the near-term momentum of the economy had been slightly on the upside relative to the August projection.

In one sentence the Bank has revealed it is ready to upgrade its growth forecasts for the United Kingdom economy.

The Bank said rate-setters were unanimous in their decision to keep the key interest rate at its record low of 0.25 percent.

The Bank of England said on Thursday it was still likely to cut interest rates to just above zero later this year, even though the initial Brexit hit to Britain’s economy was proving less severe than it had predicted only last month.

Mr Stevenson added: “With interest rates remaining at record lows, United Kingdom savers are unlikely to achieve a decent return by staying in cash”.

Under a new MPC calendar, the Bank’s next rate decision is scheduled to take place on November 3. The new timetable involves just eight meetings a year. The last scheduled MPC meeting for 2016 is on 15 December.

The Bank has not ruled out cutting interest rates further, which would cause further misery for savers. Economists expect no change after policy makers cut rates and restarted asset purchases last month, though officials may keep the door open to further stimulus later this year. Business and housing investment were expected to decline in the second half of 2016, while consumption growth was expected to slow more gradually, alongside households’ real disposable incomes.

It was more hard to draw a strong inference from these data about the Committee’s projections for 2017 and beyond.

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If growth is stronger than expected, then the chancellor may not feel it as necessary to apply the “fiscal reset” he said he was considering earlier in the summer.

“Sterling has been trading very well, it has been very stable, but actually I wouldn’t attribute so much of that to the Bank of England. Arguments and animosity about the situation along with the uncertainty that Brexit creates are likely to weigh on sentiment as the positive effects of the Olympics and a warm end to the summer start to fade”.

“With interest rates remaining at record lows, United Kingdom investors are unlikely to achieve a decent return by staying in cash”.