04 August, 2017
The MPC vote split 5-3 at the last decision to keep rates unchanged but since then the central bank's chief economist Andy Haldane has signaled his readiness for a hike to curb the effects of high inflation.
The Bank's inflation report said it expected economic growth of 1.7 per cent in 2017 and 1.6 per cent in 2018, down from the 1.9 per cent and 1.7 per cent in previous forecasts.
However, in the minutes on the policy meeting the Bank said some monetary tightening may be needed in the next three years if the economy improved as expected.
The UK 2-year gilt yield also dropped back to match the bank base rate at 0.256.
In the U.S., the Federal Reserve is on course to raise short-term rates later this year, while the European Central Bank is to begin phasing out its huge bond-buying programme in 2018.
It also fell around a cent against the dollar, plumbing a three-day low of $1.3140, having earlier reached an 11-month high of $1.3267 against the United States currency.
The MPC's forecasts are based on the assumption of a smooth exit from the European Union with Carney arguing it is in both sides' interests to have a clear transition to "whatever the end state is". Inflation projections were slightly revised upwards for the current year to 2.7% on an annual basis from 2.6% before, while the central bank's expectations for annual inflation in 2018 remain at 2.6%.
US Navy Ship Fires Warning Shots Over Iranian Patrol Boats
According to CNN , the USS Vella Gulf and two other US ships were accompanying the Thunderbolt at the time of the incident. The Iranian vessel did not respond when bridge-to-bridge communication was initiated by the US crew, the official said.
"Firms" prospects for the coming year have slipped to a level which has previously been indicative of the economy stalling or even contracting, having taken a lurch downward since the general election, largely reflecting heightened uncertainty about the economic outlook and Brexit process'.
For the pound, it's going to boil down to how things unfold in today's MPC meeting and Carney's comments in this morning's press conference, while the Dollar Bulls will be looking ahead to tomorrow's nonfarm payroll and wage growth figures, the Euro on track to hit $1.20 levels in August and sooner rather than later should the ECB's Economic Bulletin and today's finalized service sector PMI figures impress and nonfarm payrolls and wage growth disappoint tomorrow, an outcome that is more than a possibility. Kristin Forbes, the third member voting in favor of a rate rise during the June meeting, has since departed after completing her term as an MPC voting member.
Pound/dollar immediately fell upon the decision announcement and extended its losses as Governor Carney was talking, falling to as low 1.3111. As a result, I think the BoE will lower their GDP forecast for the rest of the year, and probably inflation, which could dampen rate hike expectations for the months to come. The Committee voted unanimously to close the drawdown period for the Term Funding Scheme (TFS) on 28 February 2018, as envisaged when the scheme was introduced.
It blamed the downgrade on Britain's stubbornly weak productivity and in part on the Brexit uncertainty.
Inflation is expected to remain around 2.75 percent until early next year.
There were only marginal changes to the latest inflation forecasts from those produced in the May inflation report.