The Bank of England has decided to maintain its current base interest rates for another month, which has surprised many market analysts who expected a quarter percent increase.
According to Ben Broadbent, the Deputy Governor of the BoE, the decision to keep rates steady was straightforward as the board agreed that taking a cautious approach and evaluating whether the economic weakness identified in Q1 was just a temporary dip was the right thing to do. Reports showed that the UK’s economy had only grown by 0.1% from January to March.
Mr Broadbent, speaking to the BBC, stated that it was always sensible for monetary policymakers to be cautious and assess whether the economy will bounce back in Q2.
Despite the market anticipating a rise, interest rates remain at 0.5%. The economic slowdown was thought to be due to the prolonged bad weather in the early part of the year, which impacted the construction, retail, and hospitality industries significantly.
Reduced Growth Predictions
The Bank of England has decreased its annual growth forecast from 1.8% in February to 1.4%. The Bank’s Governor, Mark Carney, expects rates to rise later in the year. He stated in a press conference held after the latest interest rates decision that the underlying rates of economic growth in the UK were still more robust than initial data might suggest.