The Bank of England leaves interest rates on hold while it waits for signs of turnaround in the slowing global economy. As David Pollard reports, Brexit fears are also weighing on the outlook.
Central bankers have been queuing up to make dovish noises on the economy. After the Bank of Japan's shock cut, Mario Draghi's hints of more stimulus, and a senior Fed official's hint of 'no hikes for now', Mark Carney joins the line. SOUNDBITE (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "Global growth has slowed again over the past few months, as emerging economies decelerated further and the US economy grew less than expected. It is now expected to remain around 1 percentage point below past averages this year." No surprise then that the Bank of England left rates on hold. Though there was surprise at Carney predicting the next rate move would be UP. Just as some in the markets factor in a possible easing. CIBC's Jeremy Stretch. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "I think it may well the case that Mr Carney feels the need to downplay or pour a little bit of cold water on those assumptions today, because if you look at the underlying real economy growth story in the UK ... that is not consistent with a reduction in interest rates." Even so, the Bank is revising down its growth outlook. To 2.2 per cent seen this year - inflation expected to stay well below one per cent. With a nervous backdrop to the outlook as the UK comes to terms with an IN/OUT referendum on whether to stay in the European Union. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "We're still waiting ultimately to find out when that referendum will be. Yes, we can assume it's going to be June, but we still don't actually know the timescale and the full ramifications of the whole procedure just at his juncture." One forecast - from Goldman Sachs - says sterling could tumble 20 per cent if the UK votes for an 'OUT'. But the currency's recent more moderate weakening: that's a positive for the UK economy for now, says Carney.