LONDON, May 10 (Xinhua) -- The Bank of England (BoE) delivered a vote of confidence in the economy in its inflation report published on Thursday.
The BoE predicted that consumer price inflation (CPI) would continue to fall, approaching the target figure of 2 percent. CPI inflation is currently 2.5 percent, according to the latest figures for March.
This target figure of 2 percent is now expected to be reached in 2020, rather than in 2021 as the bank forecast three months ago.
The quarterly inflation report (IR) noted that CPI had "fallen back more quickly than expected" at the time of the last quarterly report in February.
The BoE also left the Bank Rate unchanged at 0.5 percent, with only two out of nine rate-setting Monetary Policy Committee (MPC) members voted for a rise, with the two minority-view members being external appointees Ian McCafferty and Michael Saunders, with the BoE's six staff all voting for no rise.
Lower-than-expected economic growth in the first quarter of this year of just 0.1 percent over the quarter are seen by markets and analysts to have weighed on the Bank's decision.
The rate has now changed just twice since March 2009 when it was lowered to a then record low of 0.5 percent in the wake of the financial crisis.
The rate was further lowered by 25 basis points in the wake of the Brexit vote in the summer of 2016 and was raised back to 0.5 percent at the end of last year..
The bank made no change in its forward guidance, with the MPC's statement reiterating that it expects Bank Rate to rise.
The IR projections implied that the MPC expects to raise rates three times in the next three years by 25 basis points each time. The MPC did underline that there were exceptional circumstances presented by Brexit, which is set to occur next March within the forecast horizon that the MPC considers.
The MPC forecast GDP growth to increase after the weak Q1, which it attributes to temporary factors, especially the poor and prolonged winter weather.
The MPC forecast GDP growth averaging 1.75 percent for each of the years up to 2020.
Experts believe that further bank rate rises are now delayed for just a while.
"The tone of the MPC minutes and the forecasts contained in the May IR point very much to the BoE delaying rather than abandoning a gradual tightening of monetary policy," Dr Howard Archer chief economic adviser to the EY ITEM Club, told Xinhua.
"It is notable though that the minutes indicate that most MPC members want to see how the economic data evolves over the coming months to make sure that the first quarter slowdown was temporary," said Archer.
Archer noted that the MPC had indicated in its minutes that it believed growth in the first quarter was greater than the initial estimates, pointing towards an upward revision when more data becomes available to about 0.3 percent, which is in line with recent rates of growth.
Archer further noted that the MPC expected growth to improve in the second quarter to 0.4 percent over the quarter, and return to a growth rate around 1.75 percent over the medium term, a little above the official data body the Office of National Statistics (ONS) estimate of annual growth capability of about 1.5 percent.
Archer also said that the fall in the rate of inflation recently had been attributed by the MPC to the effects of the post-Brexit vote fall in sterling passing out of the economic figures.
"The MPC acknowledged that inflation had fallen faster than expected in the first quarter, which it attributed primarily to the impact of the past depreciation of sterling fading a little faster than previously thought," said Archer.
