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Bank Of England Keeps Rate Unchanged; Cuts Q2 Growth Outlook

The Bank of England maintained its interest rate and quantitative easing, as widely expected, but downgraded growth projection for the second quarter.

The nine-member Monetary Policy Committee, led by Governor Mark Carney, unanimously decided to hold the bank rate at 0.75 percent, the bank said in a statement on Thursday.

The previous change in the bank rate was a quarter-point hike in August 2018 and the rate is now at its highest level since 2009.

The stock of corporate bond purchases was kept at GBP 10 billion and that of government bond purchases at GBP 435 billion.

The bank downgraded its growth outlook for the second quarter to zero from 0.2 percent as the factors that underpinned first quarter growth faded.

Underlying growth appeared to have weakened slightly in the first half of the year relative to 2018 to a rate a little below its potential, the bank noted.

In May, inflation eased to the central bank target. The bank forecast inflation to fall below the 2 percent target this year.

The central bank said the monetary policy response to Brexit will not be automatic and could be in either direction. The MPC said it will always act to achieve the inflation target.

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