Bank of England DOWNGRADES UK growth to lowest level since financial crash

Bank of England DOWNGRADES UK growth to lowest level since financial crash

The BOE said that "uncertainty had intensified", and now forecasts 1.2 per cent growth this year, down from 1.7 per cent predicted three months ago, the biggest downgrade since the 2016 referendum.

"There are still as nearly as a wide of range of possibilities as there were the morning after the referendum", Carney said after the Bank's policymakers voted unanimously to keep rates at 0.75 percent, as expected.

"We hope that the rate cut will be transmitted by the financial sector to the real economy, so that economic activity could [take advantage of] the benefits and private consumption/investments may also grow faster", said Motilal Oswal, chairman & MD, MOFSL.

But with no obvious way out of the Brexit deadlock in parliament and British Prime Minister Theresa May yet to secure any concessions from Brussels, the pound faces further downside risks, analysts say. A 5 per cent depreciation in sterling would lift inflation to 2.4 per cent by the end of 2021 - versus 2.1 per cent in the current projections - while a gain of that magnitude would drop the rate to 1.8 per cent.

It has since bounced back slighting as of 12.57pm is 1.2899.

The MPC also trimmed its economic growth forecast, to 7.2-7.4 percent during April-September, from its previous 7.5 percent estimate.

The BoE sees business investment and housebuilding falling this year and a halving of the growth rate in exports.

The Governor of the Bank of England, Mark Carney leaves after a news conference at the Bank of England in London, Britain February 7, 2019.

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India's central bank on Thursday unexpectedly lowered interest rates and, as anticipated, shifted its stance to "neutral" from "calibrated tightening" to boost a slowing economy after a sharp fall in the inflation rate. The Federal Reserve has changed direction, and now many analysts expect no U.S. rate hikes this year, after four in 2018.

Howard Archer, an economist with consultants EY Item Club, said this implied two quarter-point rate rises over the next two years, compared with three expected in November.

He said the rate cut is in the right direction, given that the inflation footprint has been benign for some time. His resignation raised questions over the independence of India's central bank.

That could see a more dovish take on the domestic economy and global outlook but really there shouldn't be much in there to take away from the expectation that the central bank is aiming to proceed with a "one-and-done" rate move later this year.

He said: "The fog of Brexit is causing short term volatility in the economic data, and more fundamentally, it is creating a series of tensions in the economy, tensions for business".

The BoE's wage forecasts were little changed with earnings rising by more than 3 percent a year over the next three years.

The bigger picture remains weak.

It repeated its message that it could either cut or raise interest rates after a no-deal Brexit.

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