(MENAFN- AFP) The Bank of England on Thursday trimmed its forecast for British economic growth this year, warning about potential risks from a slowdown in emerging markets.
Gross domestic product was predicted to grow 2.7 percent this year, down from a previous estimate of 2.8 percent given in August, the BoE forecast after holding its key interest rate at a record-low 0.50 percent.
The central bank also downgraded next year's GDP growth forecast to 2.5 percent from 2.7 percent.
Policymakers meanwhile decided to freeze borrowing costs once again, against a backdrop of negative inflation in Britain.
"The outlook for global growth has weakened" since the bank gave its previous forecasts in August, the BoE said in a statement.
"Many emerging market economies have slowed markedly and the committee has downgraded its assessment of their medium-term growth prospects.
"While growth in advanced economies has continued and broadened, the committee nonetheless expects the overall pace of UK-weighted global growth to be more modest than had been expected in August.
"There remain downside risks to this outlook, including that of a more abrupt slowdown in emerging economies."
The BoE also noted that markets have pushed their expectations for a hike to the first half of 2017, compared with mid 2016 back in August.
Turning to China, the BoE warned that a sharp slowdown in the Asian powerhouse would affect the British economy "through a number of channels, including through trade and financial interlinkages".
The BoE's rate-setting Monetary Policy Committee voted by a majority of 8-1 in favour of leaving rates on hold.
The MPC maintained also the bank's level of cash stimulus pumping around the economy at £375 billion ($577 billion, 529 billion euros), it added in minutes published after its regular monthly policy meeting.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.