London stocks trail after Bank of England’s growth forecast
The Bank of England’s forecast on growth outlook leaves London stocks in red with benchmark FTSE 100 index sliding 0.28 percent on Thursday.
In its quarterly inflation report, the Bank of England said "the outlook for global growth has weakened since August". It blamed the weakness on emerging market economies, saying growth in those regions had slowed markedly.
The report forecasts that the British economy will experience 2.5% growth in 2016, down from the current 2.7%.
The bank said that based on recent falls in oil and other commodity prices, “inflation is likely to remain lower than previously expected until late 2017.”
The Bank, however, made no indication about increasing monetary stimulus and once again held UK interest rates at the record low of 0.5%. The Monetary Policy Committee, led by Governor Mark Carney, voted 8-1 to keep the rates unchanged.
The committee was more upbeat about the UK domestic outlook describing the economy as "robust" and "resilient".
“Domestic momentum remains resilient. Consumer confidence is firm, real income growth this year is expected to be the strongest since the crisis, and investment intentions remain robust,” the report said.
The BoE only noted that market expectations for it beginning to raise interest rates had been pushed back to the first half of 2017. It expressed confidence that such a delay would be sufficient to support domestic demand and gradually bring inflation back up despite global weakness.
The British pound slumped 1% against the dollar after the BoE decision on Thursday.
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