The Bank of England raised its forecast for UK economic growth for 2017, and, despite the concern of some members on the rising inflation, the bank is apparently in no hurry to raise rates during the preparation for Brexit.
Regulators unanimously voted to keep the benchmark rate unchanged at 0.25% per annum, as expected by analysts polled by Reuters. In addition, the Committee of the bank on monetary policy unanimously decided not to change the amount of buying bonds, leaving it at the level of 435 billion pounds.
Witnessing an increase in the differences in members’ opinions, the bank said that some leaders got "little closer" to losing patience, watching the bank exceeding the target inflation rate of 2%, caused by the weakening of the pound after the June vote on the withdrawal from the EU.
However, the bank, predicting the development of the British economy in the next quarter, signaled more confident that it is satisfied with the record low interest rates policy.
The Bank of England expects inflation to be slightly below the November level in the next two years.
According to the bank's management, the unemployment rate may fall to 4.5% - lower than the previous estimate of 5% and below the current level - before it starts to stimulate the growth of inflation. This may give the bank more room to keep rates at a record low for a long time.
This year, the bank expects economic growth of 2.0%, higher than what the economists anticipated and than previous forecast of 1.4%.
Growth forecasts for 2018 and 2019 have been increased by 0.1% for every year, and according to the bank, inflation will cause stagnation of living standards at the end of this year.
The prospects for the UK economy are marked by high uncertainty, including for political reasons.
The Bank of England believes that inflation will jump to 2.75% in mid-2018, although many economists say it will exceed 3.0%.