Little respite for savers as Bank holds off from rate rise

Quilter's Gillham concluded: "By holding off from a rate rise today, the Bank gives itself breathing room to raise rates later in the year if the picture improves".

Meanwhile after a raft of High Street names, including, have announced actual or planned store closures recently, the latest data this week showed retailers saw sales fall "off a cliff" last month.

The Bank of England has kept its main interest rate on hold as a run of soft economic data has made it more cautious about the outlook for Britain.

If that happens, then that would be the nail in the coffin for a rate hike from the BOE.

Mr Carney said the bank's nine-member rate-setting body thinks the "underlying pace of growth remains more resilient than the headline data suggest", according to AP.

As anticipation mounted ahead of the Bank of England's (BoE) May policy announcement the Pound to Euro (GBP/EUR) exchange rate found some limited support. "If growth rebounds as we expect in 2Q the next increase in interest rates is likely to come in August". "Stock markets don't tend to like rising interest rates much, so an environment where rates rise only gradually should be supportive for the United Kingdom stock market".

In its latest set of projections for the United Kingdom economy, published in the Inflation Report, the bank cut its forecast for economic growth this year from 1.8% to 1.4% and trimmed its growth for the following two years from 1.8% to 1.4%.

The MPC forecast GDP growth to increase after the weak Q1, which it attributes to temporary factors, especially the poor and prolonged winter weather.

While the recent hike in temperatures received a warm welcome by the British public, an increase in interest rates would have been far tougher to the stomach and United Kingdom homeowners will be very glad to see their monthly mortgage payments remain unchanged, for the immediate future at least. That wasn't a surprising decision following weaker than anticipated growth and inflation data. Hiring intentions have remained strong and, over the past three months, the unemployment rate has fallen slightly further. For 2019 and 2020, it predicted GDP growth would pick up to 1.7 per cent, down from 1.8 per cent in its February forecasts. They will decide on the monetary policy. "However, we might not see a rate rise for the rest of the year".

"Markets have interpreted today's decision and Inflation Report as moderately dovish - in our view, this reaction seems somewhat overdone", said Dean Turner, U.K. economist at UBS Wealth Management.

Despite this, Charlotte points out that more than 50% of the easy access market still only pays a rate that is less than 0.50%.

  • Zachary Reyes