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Interest rates on hold as Bank cuts growth outlook

Interest rates on hold as Bank cuts growth outlook

The Bank of England has kept interest rates on hold at 0.5% and cut its growth forecast for this year.The Bank expects growth of 1.4% in 2018, down from its previous forecast of 1.8% made in February.However, the Bank says that cut is almost entirely due to the disruption to the economy caused by the bad weather that hit the country in March.It expects a rebound in the coming months and notes that unemployment remains low.As recently as February economists were expecting the Bank to raise interest rates in May, but that view changed after figures released last month showed that the economy grew by just 0.1% in the first three months of the year.
The slowdown was caused by the so-called Beast from the East - severe weather which shut down construction sites, kept shoppers at home and caused transport chaos.However, the Bank described that as a "temporary soft patch" with "few implications" for the outlook for the economy.The financial markets are now indicating there will be an interest rate increase towards the end of the year followed by another next year, and a further one in 2020.
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