12/20/2018, 1:00 PM (Source: TeleTrader)
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BoE holds rates; sees inflation dipping under 2%

Policymakers from the central bank of the United Kingdom decided unanimously to maintain the benchmark interest rate at 0.75% and the bond portfolio at £435 billion. The expected move, published on Thursday, came alongside a forecast for inflation to decline below target 2% "in coming months" due to the decline in the price of oil. The shift should underpin demand in advanced economies, the Bank of England said and cited turmoil from the previous meeting of the Monetary Policy Committee.

"The near-term outlook for global growth has softened and downside risks to growth have increased. Global financial conditions have tightened noticeably, particularly in corporate credit markets," the summary adds together with an estimate the fiscal stimulus from the budget for the next year would lift gross domestic product by 0.3% over the mid-term horizon.

The BoE warned of a jump in funding costs for domestic banks and a spike in non-financial high-yield corporate bond spreads due to Brexit uncertainty. Long-term inflation expectations have strengthened, while corporate expenditure should "remain weak" in the short run, it said.

Baha Breaking the News (BBN) / IT