Bank of England is likely to raise interest rates faster than expected

Pound to euro exchange rate

Broadbent played down fears that a rise in interest rates would damage the economy.

By the same token, a rise in the pound depresses those earnings in sterling terms, which is partly why Thursday's rise in the pound against both the dollar and the euro has been matched by an nearly equal and opposite move in the Footsie.

That we are now moving - albeit very slowly - to what is a more "normalised" interest rate environment is undeniably welcome.

"The Bank of England was always likely to hold raising rates again so soon, so today's decision shouldn't come as a shock".

But for savers a move higher by the Bank of England could be a bonus, as High Street banks generally have to raise their rates of interest. The first interest rate rise since 2008 in the United Kingdom occurred in November 2017, going from 0,25 percent to 0.5 percent.

But it now appears there could be a third increase and those rises could be sooner than expected.

The BoE also lifted its forecasts for United Kingdom economic growth boosted by global growth despite arguing that Brexit uncertainty is weighing on United Kingdom business investment.

The Bank also cautioned that Brexit remained the biggest threat to growth, while households continue to be squeezed by poor wage growth and falling inflation.

The comment came on the back of a higher growth forecast, with the Bank expecting an average annual expansion of 1.75% over the next three years.

That view includes an assumption that Britain will be able to get "a smooth adjustment" to a new trading relationship with the EU.

Today the Bank signalled that the old conventions of increasing interest rates when inflation is above target would return.

But not everything in the garden is rosy.

We are driving along with the hand brake half on.

They said the United Kingdom will grow by an extra 0.4 per cent in 2018 and said that rate of acceleration will be sustained into 2019 too. While a future rate rise is likely, current rates remain low. Already market expectations are outpacing the bank's revised forward guidance for three rate hikes over three years.

As forecast, the Bank of England has left the United Kingdom bank rate at 0.5%, its asset purchase target at £435 billion and its corporate bond target at £10 billion.

The Organisation for Economic Cooperation and Development, the West's leading economic think tank, said the UK's economy would grow by 1.6 per cent - up from the 1.2 per cent it predicted just a few months previously.

Unemployment remains low at 4.3% and inflation edged lower in December to 3%.

Bank Governor Mark Carney said "developments regarding the United Kingdom's withdrawal from the European Union are the most significant influences on — and sources of uncertainty about — the economic outlook".

At the same time, the fall in consumer price inflation was projected to be more gradual in the near term than expected at the time of the November Report.

The chancellor replied by stressing the importance of boosting United Kingdom productivity and the government's efforts to make that happen.

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