Feb 05, 2016 (LBO) – The Bank of England has forecast country’s economy would grow 2.2 percent this year and 2.3 percent in 2017, cutting its November forecast of 2.6 percent for this year.
“Although activity growth in the United Kingdom has slowed to slightly below average rates, the domestic private sector remains resilient,” the Bank of England’s Monetary Policy Committee (MPC) said in its February meeting.
“GDP is expected to grow at around average rates over the forecast period as a tighter labour market and rising productivity support real incomes and consumption.” the Committee said.
Monetary Policy Committee has also decided to maintain Bank Rate at 0.5 percent to meet the 2 percent inflation target while helping to sustain growth and employment.
At its meeting ending on 3 February, the MPC judged it appropriate to leave the stance of monetary policy unchanged.
The MPC judges it more likely than not that Bank Rate will need to increase over the forecast period to ensure inflation remains likely to return to the target in a sustainable fashion.
In December, twelve-month CPI inflation stood at 0.2 percent, almost 2 percentage points below the inflation target.
The Committee said returning inflation to the 2 percent target requires balancing the protracted drags from sterling’s past appreciation and low growth in world export prices against increases in domestic cost growth.
The Committee has also voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.
The Bank of England has also slashed its wage forecasts, predicting wage growth of 3 percent this year.
Founded in 1694, the Bank of England is the central bank of the United Kingdom and it’s mission is to promote the good of the people of the United Kingdom by maintaining monetary and financial stability.
The Bank’s objective is to deliver low and stable prices, and is defined by the Government set inflation target of a 2 per cent year-over-year increase in the Consumer Prices Index.
Decisions to achieve that objective are taken by the Bank’s Monetary Policy Committee.