Bank of England keeps interest rates on hold despite inflation fears

Office business tools with dollars and calculator on table

Office business tools with dollars and calculator on table

The pound hit a nine-month low against the euro and fell by more than a cent against the USA dollar.

"As a effect, the household saving ratio fell from 3.3% to 1.7%, its lowest level since the series began in 1963".

Some investors see hawkish comments from policymakers at the Bank as attempts to talk up a currency that has lost nearly 15 percent against both the euro and dollar since last June's vote for Brexit.

However, Haldane's comments were not reflected in his vote. So, just a small improvement in growth could bring forward a rate hike.

The Bank of England's August Inflation Report shows 2017 inflation increasing slightly more than expected in the May report, and GDP growth remaining more sluggish than expected as a result.

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.

The MPC now predicts investment in 2020 to be 20 percentage points lower than what it had forecast before the referendum.

Consumer spending will "remain subdued throughout the next three years", the MPC said, dragging on the economy.

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Sir Charlie, who now serves as a senior official at the Office for Budget Responsibility, said a dramatic drop in the saving ratio - which measures the amount British households have available to save as a share of disposable income - suggested Britons were likely to cut back on spending.

The Bank reiterated that its forecast were predicated on the assumption of a "smooth" Brexit in 2019, implying that a no deal "cliff-edge" in two years would do severe damage.

The bank's Monetary Policy Committee voted to keep rates on hold amid uncertainty about Britain's economic prospects as it prepares to leave the European Union.

A no-change scenario was widely expected, but what one commentator called the "change in tone" from Bank Governor Mark Carney did provoke surprise. The closure of the scheme will come in February 2018, the MPC announced, in line with its previous plans to give six months' notice. Revenue was $2.8 billion, up 120.5% year-over-year, and above the $2.55 billion analysts were expecting.

Speaking to World at One, Longworth said that the Bank didn't have a "good record" when predictions were concerned and that Governor Mark Carney's statement on the current expectations sounded like "project fear all over again". However, he added, "we do expect those to build".

The report maintained expectations on inflation, predicting it would peak at around 3 per cent in October.

The Bank still predicts there will be some slack in the labour market, despite the low headline unemployment figure, as firms hold back from pushing workers to their full capacity.

The yield on the benchmark 10-year gilts, slumped 4 basis points to 1.19 percent, the super-long 30-year bond yields hovered around 1.87 percent and the yield on the short-term 2-year plunged 2-1/2 basis points to 0.26 percent by 11:00 GMT.

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