- Mark Carney, BoE Governor
The Bank of England downgraded its growth forecasts for the UK economy, but said it is still on course to hike interest rates in the middle of next year, as gradual rate increases will be sufficient to get inflation back on track. The central bank now predicts the British economy to grow 2.5% in 2015 and 2.6% in 2016, compared with its February outlook for growth of 2.9% this year and next. The revision came in response to sluggishness in the UK housing market and threat that a strong Sterling will undermine exports. BoE Governor Mark Carney also highlighted risk stemming from a potential disorderly end to Greece's attempts to strike a deal with its European lenders over repaying billions of euros. With consumer inflation growth at zero, the report was accompanied by a letter from BoE Governor explaining the deviation from the central bank's inflation target. While Mark Carney acknowledged cost of living may slid below zero in the coming months, there will be a rebound at the end of the year, and the next move in borrowing costs is likely to be an increase. The BoE rate has been at an all-time low 0.5% for more than six years.
Meanwhile, the UK's unemployment rate slid to the lowest level since mid-2008 in the first quarter, while total average weekly earnings rose more than expected. The jobless rate fell to 5.5% from 5.6%, and worker's pay rose 1.9% in the three months to March.
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