Lowered growth forecasts for UK economy – Economist

The Bank of England cut its forecast for British economic growth for the next three years and was in line with current market expectations that only begin raising interest rates in a year.

The Bank of England cut its forecast Wednesday of British economic growth for the next three years and was in line with current market expectations that only begin to raise interest rates within a year.

The central bank now expects economic growth to be 2.5% this year, he said in a quarterly report, below the projected 2.9% to I had in February and closer to the expectations of most economic analysts.

The United Kingdom was the country that grew among advanced economies last year, regaining the ground lost during the financial crisis.

The Bank of England Governor, Mark Carney, said inflation is likely to rise later this year, arguing that the declines in the prices of raw materials would be “relatively short” .

The economic growth slowed in early 2015 and the newly elected conservative government of Prime Minister David Cameron is facing an important channel it in a more sustainable path challenge.

The Bank of England said its downgrade of the growth was due to the fact that interest rates could rise faster than the markets had expected three months ago, and due to the strengthening of the pound and a weaker outlook for construction housing and productivity.

After stating in April that the pace of hikes priced in by the markets was extremely slow rates, the institution seems now more in line with what the market expected.

The Bank of England forecasts are based on the estimate that market interest rates rise from their record low of 0.5% in the second quarter of next year -three months earlier than expected in February-and half is sitúen at 0.9% in the last three months of 2016.

The Bank of England has kept interest rates unchanged for more than six years.

The central bank also cut its forecast for wages, saying that will have increased 2.5% at the end of this year compared with an earlier forecast of 3.5% growth, to return to pick up to 4% next year.

ERP