Investing.com – As expected, the Bank of England (BoE) decided on Thursday to keep interest rates unchanged at a record low as well as to make no changes to its asset purchase program.
Specifically, the BoE left the benchmark interest rate at a record low of 0.25%, in line with market forecasts.
The decision to maintain interest rates was undertaken in a unanimous vote.
Furthermore, all members of the Monetary Policy Committee (MPC) agreed to leave its asset purchase program unchanged as expected at £435 billion.
The inflation report revealed that the MPC had increased its central expectation for growth in 2017 to 2.0%, from a previous estimate of 1.4%, with slight growth of 0.5% in the first quarter of this year.
It also expects a slight acceleration of growth to 1.6% in 2018 and 1.7% in 2019.
Additionally, the BoE left its forecast for inflation at the beginning of 2018 unchanged at 2.72%.
The committee reduced the consumer price index (CPI) estimate for 2019 to 2.56% from the prior 2.7% and for 2020 to 2.36% from 2.49%.
Inflation is expected to peak at 2.75% and in the second quarter of 2018. The forecast from last November had penciled in CPI of 2.83%.
“The upgraded outlook over the forecast period reflects the fiscal stimulus announced in the Chancellor’s Autumn Statement, firmer momentum in global activity, higher global equity prices and more supportive credit conditions, particularly for households,” the minutes revealed.
The MPC maintained a neutral stance on the future path of interest rates a more abrupt slowdown than expected could require loosening of monetary policy while a more-than-anticipated increase in pay growth could require tightening.
Investors will look ahead to BoE governor Mark Carney’s press conference on the inflation report at 8:30AM GMT (12:30GMT) for further explanations on the future path of U.K. monetary policy.
Following the releases, GBP/USD traded at 1.2603 from around 1.2659 ahead of the publications, EUR/GBP was at 0.8571 from 0.8541 earlier, while GBP/JPY traded at 141.60 compared to 142.21 before the reports.
Meanwhile, European stock markets traded with mixed signs. London’s FTSE 100 rose 0.47%, the Euro Stoxx 50 slipped 0.04%, France's CAC 40 advanced 0.17%, while Germany's DAX lost 0.17%.