(menafn – ecpulse)
U.K. services expansion ease added to concerns economic recovery is faltering, especially after the slowdown in growth in the major sectors.
PMI services showed an ease in expansion in April to 53.3 from 55.3 in March. This week, PMI manufacturing also showed an ease in expansion to 50.5, the lowest since December, compared to a revised of 51.9, while construction showed a narrowing expansion to 55.8 from 56.7 in March.
With the economy's major sectors deteriorating with the beginning of the second quarter, worries are increasing the economy will experience a deepening recession.
The British economy has recorded 0.2% contraction in the first quarter, following the 0.3% contraction recorded in the last quarter of 2011.
BoE King said the British economy is recovering from the 2008 financial crisis slower than hoped, admitting that "we did preach sermons about the risks. But we didn't imagine the scale of the disaster that would occur when the risks crystallized."
He added that keeping interest rate at its current low level is needed to come back on the sustainable growth path.
In April, BoE opted to leave both borrowing cost and APF steady at 0.50% and 325 billion pounds, where expectations are referring to a hold in monetary stance this month.
A serious threat is coming from the recent rise in inflation as CPI for the year ended March unexpectedly soared for the first time in six months to 3.5% from the lowest in 15 months of 3.4% in February, where prices halted its downside fall after retreating from a high of 5.2% in September last year.
King said "although inflation has fallen back in recent months, it is still too high."
However, policy makers may not be able to add any stimulus any time soon after the rebound in prices. The CBI, however, referred there is no need to expand stimulus as the economy will rebound from recession.
In the FX market, the pound retreated for a fourth day against the dollar to trade around 1.6165 compared to the day's opening of 1.6197.