Sterling dropped lower on the news with the 7-1 split seen as fairly dovish by the market. The BoE trimmed its prediction for growth this year but upped it for 2018 and 2019, hinging on a big pick-up in wage growth and stronger exports and investment - things the central bank has predicted before, but which have largely not materialised.
It said growth had fallen "markedly" in the first quarter and added a "slowdown appeared to be in train".
This negative development has been largely offset, according to the BOE, by more optimistic prospects for global growth - and therefore United Kingdom exports - and the appetite of United Kingdom businesses to continue investing, despite headwinds posed by uncertainty over the U.K.'s impending departure from the European Union (EU). Monetary policy can not prevent either the necessary real adjustment as the United Kingdom moves towards its new worldwide trading arrangements or the weaker real income growth that is likely to accompany that adjustment over the next few years.
Bank governor Mark Carney will also likely be quizzed over the outlook for consumer spending as retail sales have plunged amid the squeeze on household income from Brexit-fuelled inflation.
The Bank's forecasts are based on a "smooth" adjustment to a new trading relationship with the European Union after Brexit, the MPC said.
The Bank's rate-setting committee held rates at 0.25 per cent in May, but one member Kristin Forbes voted for a rise to 0.5 per cent.
The bank now expects inflation to be 2.7% this quarter, up from the 2.4% rate it forecast in February. In comments so far this year, he's broken with previous form and mostly stuck to the Monetary Policy Committee's central view. Importantly, they also note that monetary policy "could need to be tightened by a somewhat greater extent" than the path implied by markets.
Russia, Saudi Arabia back extension of oil output cuts
Saudi Arabia and Russian Federation have agreed to extend the oil output reduction deal for another nine months, until march 2018. On the news, Brent crude rose 2.3% to $52.04 a barrel while West Texas Intermediate ( WTI ) climbed 2.6% to $49.09.
John Guidetti Breaks His Silence On THAT Miss Against Manchester United
Jose Mourinho has claimed that he has already decided upon a starting XI for the Europa League final against Ajax on May 24. "When people say we gamble, we didn't gamble, we didn't choose the Europa League - we had to do it".
Pochettino points to Chelsea spending as key to title win
Chelsea were crowned champions on Friday thanks to a 1-0 win over West Brom, which came about thanks to a late goal from substitute Michy Batshuayi.
Fawad Razaqzada, analyst at Forex.com, said the bank had delivered a "mixed message overall" and that markets were "disappointed" that only one MPC member had voted for a rate rise.
The bank also warned that it may need to hike up interest rates sooner than the market thinks. As the Brexit vote's effect on the Pound continues to cause inflation to rise and wage growth to slow, living standards in Britain are likely to worsen.
At the latest meeting, quantitative easing has been kept unchanged at £435bn, and corporate bond purchases remain at £10bn.
Nonetheless, as Jeremy wrote in his Sterling Update earlier this week, much has changed over the past quarter that will have to be reflected in the Bank's forecasts today. Markets will be looking for clues as to when inflation becomes so intolerable that its hands are tied and it has to act. We anticipate no rise in Bank Rate until late-2018, ' he said.
"The Bank of England is stuck between a rock and hard place", said Aberdeen Asset Management Chief Economist Lucy O'Carroll. To say that is far from certain is a huge understatement.
The improvement in global conditions, as well as the recent rebound in the value of sterling, will lead to a gradual pick-up in wages and therefore spending after a short-term dip, the Bank's forecasts showed.