Bank of England keeps rates at record low as economy slows

The slowdown appears to be concentrated in consumer-facing sectors, partly reflecting the impact of sterling's past depreciation on household income and spending.

Under governor Urjit Patel, the Reserve Bank of India (RBI) will target inflation of 4 percent, three officials familiar with its thinking said, adopting a narrower reading of its mandate than markets in a bid to stamp out rampant price rises of the past. Data released on Friday showed speculators trimmed their short positions on the pound for a third week in a row, to a two-month low of 81,364 contracts.

The small downgrade comes after a first quarter in which slower consumption put a brake on growth, with a weak 0.3 per cent quarterly expansion that surprised many economists.

"That means the next government must truly get behind a new Industrial Strategy to drive growth and job creation across the United Kingdom and also deliver a new migration system that ensures firms have access to the skills and labour they need post-Brexit".

"The MPC expects inflation to rise further above the target in the coming months, peaking a little below 3% in the fourth quarter".

Jonathan Cribb, a senior IFS research economist, commented, "A period of this length over which earnings have fallen is unprecedented in modern times".

Britain's economy was one of the best performing major advanced economies previous year, wrongfooting the BoE and most other forecasters who predicted that voting to leave the European Union would send the economy into a tailspin. He said inflation would near 3 percent this year. The most important of them will be the manufacturing production indicator.

This decline is under conditions in which workers have already suffered the worst fall in wages in Europe-down by 11 percent since 2007-outside of Greece.

Millions more only manage to stay afloat by relying on savings, credit cards and loans.

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The Bank of England warned about it. Brexiters called it "project fear".

Faced with Brexit unknowns, a national election and mixed economic data, Bank of England Governor Mark Carney and his colleagues will probably say on Thursday they want more clarity before paving the way for the first interest rate hike in almost a decade. In fact, the average household now owes around £13,000, excluding mortgages, and total unsecured debt is at an all-time high of £349 billion. Last year Britain's economy grew 1.8 percent. Largely because of the decision to leave the European Union. Only one member of the committee voted to raise interest rates by 25 basis points.

Yet Deputy Governor Ben Broadbent has said the current "sweet spot" - with the nation still in the single market and exporters boosted by sterling's weakness - may not last. Utility and consumer-services shares were the biggest decliners, but gains for commodity stocks were mostly offsetting those losses.

The report itself signalled that investors in the market may have underestimated the need for higher borrowing costs two or three years from now.

While the living standards of large sections of the working class are deteriorating post-Brexit, stock markets continue to show near record highs.

That echoed other forecasters' warnings over falling living standards.

Some analysts have taken this as an urge towards UK Prime Minister Theresa May, to get a UK-EU deal rather than Brexiting without any deal at all.

Sterling, earlier trading at $1.2920, fell to $1.2872 after the decision. Nonetheless, wages remain an issue here in the UK.

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