The Bank of England's monetary policy committee voted unanimously to maintain interest rates at 0.75%, in line with market expectations, and lowered its GDP growth forecast for 2019.
The central bank now expects U.K. GDP to grow 1.3% in 2019, down from its previous prediction of a 1.5% expansion in May, reflecting "weaker global growth as well as the impact of Brexit-related uncertainties." It also lowered its growth rate forecast for 2020 to 1.3% from 1.6% previously, while raising that for 2021 to 2.3% from 2.1%.
Meanwhile, the BoE expects inflation to fall temporarily below its 2% target later this year, due to the recent falls in energy prices. Annual inflation in the U.K. met the central bank's 2.0% target for the second consecutive month in June.
"These projections are affected by an inconsistency between the smooth Brexit conditioning assumption underpinning the forecast and the prevailing market asset prices on which the forecasts are also conditioned," the central bank said, adding that a more consistent forecast would have "somewhat lower paths" for GDP growth and inflation in case of a smooth Brexit.
"Increased uncertainty about the nature of EU withdrawal means that the economy could follow a wide range of paths over coming years," the BoE also said.
The monetary policy committee also decided to maintain its purchases of nonfinancial corporate bonds at £10 billion and U.K. government bonds at £435 billion.
The pound depreciated 0.4% against the dollar to $1.21 and was broadly steady at 91 pence against the euro as of 12:40 p.m. London time.