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BoE cut its growth forecasts

Wednesday, May 13 2015
The Bank of England cut its forecasts for British economic growth over the next three years on Wednesday and cautiously backed market expectations that it will only start to raise interest rates in around a year's time.The central bank now expects economic growth this year of 2.5% it said in its quarterly Inflation Report, down from a 2.9% projection in February and closer to most other economic forecasters' expectations. The Bank said its growth downgrade was due to the fact that interest rates were likely to increase faster than markets had expected three months ago, as well as due to a stronger currency and a weaker outlook for house building and productivity.
 
 
BoE Governor Mark Carney said inflation was likely to pick up later this year."Although it could temporarily turn negative in the near term, inflation is expected to pick up notably towards the end of the year as past falls in prices drop out of the annual comparison," he said, speaking a press conference. "The MPC (Monetary Policy Committee) expects the past falls in commodity prices to be relatively short-lived and will therefore look through them in setting policy," he said.
 
After the report Sterling fell and is currently being traded few points below 1.5660 level. Pair is likely to find support at 1.56 area and resistance above 1.57 handle. Later today, in the US session, Retail Sales figures are scheduled for a release.
More in this category: « Eurozone GDP up by 0.4% Another weak month for US retail sales »

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