-George Buckley, an economist at Deutsche Bank AG
The Bank of England held its benchmark interest rate unchanged as strong growth at home was offset by worries about clouding economic outlook abroad. The BoE's Monetary Policy Committee agreed to keep the main policy rate at 0.5%, and the central bank's bond portfolio unchanged at 375 billion pounds, in line with expectations. The minutes on the MPC's decision will be published on July 22. Most economists expect the BoE to begin raising the interest rate in the first quarter next year, if inflation rises in line with expectations and fundamentals do not deteriorate markedly.
The International Monetary Fund expects the UK economy to grow 2.7% this year, marking one of the fastest rates of growth among Group of Seven developed economies. However, the British economy is giving off mixed signals. While growth is seen accelerating in the second quarter, the recovery remains uneven, with the services sector expanding robustly and providing support to the economy, while manufacturing lags behind, staying at the weakest level in more than two years. The British unemployment rate has declined to the lowest level since 2008, and BoE policy makers have signalled they are inching toward lifting borrowing costs but want to see faster growth in wages and prices before acting.
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