"As guidance evolves, that remains the case: the Monetary Policy Committee will not take risks with the recovery" - Mark Carney, BoE Governor
Bank of England Governor Mark Carney underlined his pledge to maintain interest rates unchanged at a record low in an overhaul of forward guidance to fight persisting slack in the U.K. economy. The Bank of England revised its growth outlook upwards, urging investors to increase bets for higher rates even as Carney attempts to reassure that borrowing costs will stay at 0.5% for some time, reiterating that the timing and the level of a possible hike will depend on economic performance, as well as the labour market. The U.K. GDP for the year 2014 is projected to reach 3.4% up from the previous 2.8%, as well as for 2015 the economy is seen to grow at 2.7% compared to 2.3% previously estimated. Despite the positive revision, Carney said that the nation's economy is still facing substantial headwinds.
Also, the central bank shares slightly lower inflation projections, reflecting smaller-than-expected increases in utility prices and a stronger Pound, and expects the unemployment rate to hit the 7% target already in January, much sooner than originally estimated. The BoE estimates that after inflation slows to 1.7% in the second quarter of 2015, it will accelerate to 1.9% in 2016 and stay around that level. Following the BoE's quarterly Inflation Report, the Sterling advanced versus the U.S. counterpart, gaining 0.44% to $1.6521.
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