FX.co ★ Bank of England could raise UK growth forecasts

The Bank of England will publish its report on the economy next month. Bank of England governor Mark Carney hinted that the bank could raise growth forecasts as the latest data signal improvement in the economy. This is due to the UK central bank’s actions that helped to avoid a market meltdown after the referendum. However, he warned that the transition deal for quitting the EU still could weigh on some weak spots in the economy.

In November, the Monetary Policy Committee of the Bank of England raised its growth forecasts after lowering outlook three months earlier.

The bank predicts the UK economy will grow at 1.4% rate in 2017. Its estimate for 2016 is growth of 2.2%. At the same time, Carney said the Brexit vote would influence growth rates this year.

In the meantime, the weaker pound sterling triggered a rise in inflation. According to economists, the next move of the Bank of England would be a rate hike. Consumer prices are expected to rise to the target level of 2% next quarter. According to Carney, the UK is already witnessing significant growth.

Traders see a 25% rate hike possibility by the end of 2017 compared with a 20% chance at the beginning of the year.