Monday 21, May

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.

He might suggest that he and the other eight members of the MPC are less the unreliable partners, more the "sensitive" listeners.

Sensitive to changes in the data which effect a decision based on fine margins and delicate judgements.

It was John Maynard Keynes who said that when the facts changed, so, sir, did he.

Today the Bank has changed tone. Let's wait and see, it is saying.

Let's wait and see how the economy develops until we give any firm guidance on the path of interest rates beyond the Bank's often used formulation of some limited rises "over the forecast period" of the next three years.

Yes, they will rise at some point. But the chances of that happening sooner rather than later has receded.

Read Kamal's blog in full

Waiting game

The minutes from the meeting show the MPC wants to wait and see how the economy performs over the coming months.

While they expect it to recover from a weak start to the year, there is a risk that the slowdown could be more persistent.

The course of interest rates depends on inflation falling in line with the Bank's expectations.

In March, inflation was running at an annual rate of 2.5%, which is above the Bank's target of 2%.

What exactly is the Bank of England interest rate?

But in its most recent Quarterly Inflation Report, the Bank blames above-target inflation on higher prices of imported goods caused by a weaker pound.

The Bank expects that effect to fade over the coming years, bringing inflation back to 2% by early 2021.

It also forecast that the unemployment rate would fall further, to 4% by 2020, the Bank's lowest forecast since the financial crisis.

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