The Bank of England has kept interest rates on hold at 0.5% and cut its growth forecast for this year.
The Bank expects growth of 1.4% in 2018, down from its previous forecast of 1.8% made in February.
However, the Bank says that cut is almost entirely due to the disruption to the economy caused by the bad weather that hit the UK in March.
It expects a rebound in the coming months and notes that unemployment remains low.
As recently as February economists were expecting the Bank to raise interest rates this month.
That view changed after figures released last month showed that the economy grew by just 0.1% in the first three months of the year.
The slowdown was caused by the Beast from the East – severe weather which shut down construction sites, kept shoppers at home and caused transport chaos.
However, the Bank described that as a “temporary soft patch” with “few implications” for the outlook for the economy.
The financial markets are now indicating there will be an interest rate increase towards the end of the year followed by another next year, and a further one in 2020.
- UK economy in weakest growth since 2012
- UK inflation falls to lowest in a year
- Year-long wage squeeze nearing an end
Movements in the Bank’s official rates can have big effects on UK households. A rise would mean that about four million households with variable or tracker rate mortgages would see an increase in their monthly payments.
But an increase would benefit the nation’s 45 million savers and could help anyone shopping for an annuity for their pension a better deal.
Bank of England governor Mark Carney sets interest rates with a team of eight other experts that form the Monetary Policy Committee (MPC).
At the latest meeting, seven members voted to keep interest rates on hold and two, Ian McCafferty and Michael Saunders, voted for an increase.