Bank of England keeps its interest rate at 0.25 percent; cuts growth forecast

The Bank of England (BoE) announced that its Monetary Policy Committee (MPC) decided to leave its rates and asset purchase program unchanged, as widely expected.

The BoE's monetary policy statement revealed that, at its meeting, which ended today, the committee voted by a majority of 6-2 to maintain the bank rate steady at its record low of 0.25 percent. The decision was widely expected by the markets.

At the same time, the BoE's policymakers voted unanimously to leave its quantitative easing (QE) program unchanged at a total of 435 billion pounds.

The BoE also published the August Inflation Report, which contained its officials' latest assessment of the outlook for output, unemployment and inflation, etc. The report showed the MPC had slashed forecasts for UK growth in 2017 to 1.7 percent from its previous forecast of 1.9 percent, while 2018 growth projection was cut to 1.6 percent from its previous estimate of 1.7 percent. According to the report, GDP growth remains sluggish in the near term as the squeeze on households' real incomes continues to weigh on consumption.

At the same time, assessment of the outlook for inflation was broadly similar to that in May. "The MPC expects inflation to rise further in coming months and to peak around 3 percent in October, as the past depreciation of sterling continues to pass through to consumer prices", the report said.