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The Pound (GBP) exchange rate plummeted against the majority of its peers on Thursday as markets reacted to the Bank of England's (BoE) latest policy meeting. Until a few weeks ago, the bank was widely expected to raise the main rate by a quarter-point to 0.75 percent, its highest since 2009, when Britain was in its deepest recession since World War II. In February, Carney said rates might need to rise somewhat faster than markets had expected. That is something that households and businesses understand, he said.

While they expect it to recover from a weak start to the year, there is a risk that the slowdown could be more persistent.

The Bank expects that effect to fade over the coming years, bringing inflation back to 2% by early 2021.

Investors responded to the announcement by slightly pushing back their expectations of when the BoE was likely to raise rates for only the second time since the global financial crisis.

That has roiled markets, first driving the pound to its highest since the June 2016 Brexit vote and then down sharply again. It was down 0.2 per cent at US$1.3527 as of 12.58 pm in London.

As The Bank of England Governor Mark Carney explained during the press conference, that the United Kingdom households and business all expect the Bank rate to rise slightly in three-year time, but they all are more anxious about the actual outcome of the Brexit negotiations as the future path for the policy rate will be up, with move only gradual and limited.

The Inflation Report also showed that about one quarter-point hike a year will be needed to return inflation to the goal after the first increase in a decade last November. If officials unanimously maintain borrowing costs at 0.5 percent, a "dovish hold", the pound could drop toward $1.3350, Patel said.

Though the national statistics office downplayed the impact of the cold weather on growth, the Bank of England said the so-called "Beast From the East" cold weather front was a key factor.

Tim Focas, director of financial services at Parliament Street says that caution is advised, but Mr Carney's position on Brexit remains questionable.

Let's wait and see how the economy develops until we give any firm guidance on the path of interest rates beyond the Bank's often used formulation of some limited rises "over the forecast period" of the next three years. That matters as the Bank of England's primary mission is get inflation close to 2 percent.

Only a handful of analysts now think the central bank will take the longer-term view that focuses on potential inflation pressures from unemployment at its lowest since 1975 and some signs of wage growth inching up.