Bank of England cuts United Kingdom growth forecasts

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But the Bank of England also said that they expect near-term inflation to remain around 2.75%, which would further squeeze a British consumer that's largely been using debt to counter the continued rise in prices.

The decision to leave rates unchanged was as the vast majority of City economists had expected.

The pound hit a nine-month low against the euro and fell by more than a cent against the USA dollar.

It means savers are seeing the value of their savings slowly eroded away, with little sign of relief in sight.

They have been at that level since August past year.

Overall, the market was willing to accept an earlier rate rise, but the glum outlook for growth and wages has weighed heavily on the pound.

The pound is down almost 1% across the board after the BOE cut its growth forecasts for the United Kingdom, and Governor Mark Carney said that the UK's economic potential is now only 1.75% GDP growth per year.

The Dow Jones Industrial Average rose 2.68 points, or 0.01 percent, to 22,018.92, the S&P 500 lost 4.8 points, or 0.19 percent, to 2,472.77 and the Nasdaq Composite dropped 14.06 points, or 0.22 percent, to 6,348.58.

Richard Sexton, director of chartered surveyor e.surv, says: "With the current political and economic uncertainty, it is not a question of if, but when will rates eventually rise".

The BoE kept borrowing costs at a record low once again and trimmed its forecasts for economic growth both this year and next. Through most of the forecast period, the economy operates with a small degree of spare capacity and CPI inflation is well above the target.

Officials voted unanimously to keep the size of the BOE's government and corporate-bond portfolio at GBP445 billion ($558 billion). It also announced that it won't be extending the Term Funding Scheme, which was part of the Brexit stimulus package.

Investors had speculated Bank of England economist Andy Haldane could join the hawks this time round, having signalled his support for a rate rise this year in June.

The service sector accounts for around 78 per cent of the United Kingdom economy, and is made up of industries such as restaurants, hotels, financial services and tourism. Shares in the bank rallied as much as 5% in Milan.

Earlier, a purchasing managers' index (PMI) survey for Britain's dominant services industry showed a slight pick-up in July to 53.8, which came as a relief to those anxious about an economic slowdown and sent sterling briefly higher. A reading above 50 indicates growth.

UK GDP growth disappointed in Q1 delivering 0.2 per cent, while the first estimate for Q2 is 0.3 per cent.

Furthermore employers took on more staff, with job creation seeing its strongest growth for a year-and-a-half. Consequently, inflation remains at a level slightly above the 2% target.

The Committee made the decision to keep rates the same by six votes to two.

The Bank said it now expects the economy to grow by 1.7 percent this year, down from its May forecast of 1.9 percent.