Interest rates held again as Bank reduces growth forecast

The Bank of England’s Monetary Policy Committee has voted 6-2 to keep interest rates on hold at 0.25 per cent.

Today’s decision comes as the bank edged its growth forecast for the UK down to 1.7 per cent from its previous forecast of 1.9 per cent made in May. It also cut its forecast for 2018 from 1.7 per cent to 1.6 per cent.

It is also now gloomier on prospects for wage growth and thinks wages will grow by 3 per cent in 2018 down from the 3.5 per cent estimate it made in May.

Interest rates have now been at their current record low level since August last year and have not risen since July 2007.

Bank governor Mark Carney said weak wage growth combined with rising inflation has been weighing on the spending power of households.

He said: “It’s evident in our discussions across the country with businesses… that uncertainties about the eventual relationship are weighing on the decisions of some businesses.

“Investment has been weaker than we otherwise would have expected in a very strong world… So the consequence of that is starting to build… the speed limit of the economy, if you will, has slowed.”