In its monetary policy meeting held last Thursday, the Bank of England kept its benchmark interest rate unchanged amid uncertainty over the economy’s wider direction. The UK central bank was widely expected to hold rates at their current 0.5 per cent level, amid falling inflation and lacklustre growth data.

The bank’s Monetary Policy Committee voted by six to three to keep rates at the current level, with the bank’s chief economist Andy Haldane voting to raise borrowing costs, along with the more hawkish committee members Michael Saunders and Ian McCafferty. However, the bank said all committee members “agree that any future increases in (the) bank rate are likely to be at a gradual pace and to a limited extent”.

In the meantime, Germany’s Ifo institute cut its forecasts for growth in Europe’s largest economy this year and next, citing a weak start to the year and increased global risks. Ifo said that it expects the German economy to expand by 1.8 per cent this year and in 2019, a big downward revision from the previous forecasts of 2.6 per cent and 2.1 per cent respectively. Ifo added that the economic upswing in Germany should continue but at a slower pace.

In addition to weak industrial activity and exports in the first four months of the year, a trade dispute between the US and the EU is clouding the outlook for the German economy. US President Donald Trump is threatening to impose hefty tariffs on car imports from European allies in addition to unilateral metals duties.

Finally, in the US, sales of existing homes unexpectedly decreased in May, according to a report released by the National Association of Realtors. NAR said existing home sales fell by 0.4 per cent to an annual rate of 5.43 million in May.

“Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market.”

This report as compiled by Bank of Valletta for general information purposes only.