Unveiling the Bank of England’s (BOE) latest outlook on the economy, Governor Mark Carney warned on Thursday of a consumer spending squeeze this year as inflation rises and real wages fall.
In its Quarterly Inflation Report, the BOE raised its forecast for inflation this year to 2.7 percent from its February estimate of 2.4 percent.
Bank policymakers trimmed UK economic growth forecasts for 2017 from two percent to 1.9 percent and held interest rates at 0.25 percent. They predicted a brighter global outlook and better investment incentives would support growth in the coming years and slightly revised growth forecasts for 2018 and 2019 up to 1.7 percent and 1.8 percent respectively.
Official data shows the UK economy grew by 0.3 percent in the first quarter of 2017, a sharp slowdown from the 0.7 percent growth rate in the final three months of 2016.
Sterling slipped after the Bank’s report as some investors had expected to see a deepening split among policymakers about the need for higher interest rates. The British currency was down 0.44 percent to $1.2881 against the US dollar as of 2:18 pm GMT.