Bank of England sets up its own fintech hub

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The Bank of England kept interest rates steady on Thursday but two policymakers unexpectedly voted for a hike, boosting confidence among investors that borrowing costs will rise in May for only the second time since the 2008 financial crisis.Ian McCafferty and Michael Saunders - the first officials to call for rates to rise a year ago - said it was now time to push them above the emergency level at which they have sat for most of the past decade.

"Recent snow-related disruption was likely to have a measurable adverse effect on growth in the first quarter, although it was hard to quantify the precise extent of this", the Bank's Monetary Policy Committee (MPC) said.

As in February, the minutes showed that the "best collective judgment" of the rate-setting panel was that "an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to its target at a more conventional horizon". While UK retail sales lifted strongly in February by 0.8%, more than expected (most economists had penciled in a 0.4% climb), much of the February sales lift was down to supermarket sales growth rather than broader high-street shopping (bear in mind the demise of Maplin and Toys R Us).

First, a rate rise looks a dead cert for the next 10 May monetary policy committee meeting (there's no meeting in April).

The Bank noted the recent Brexit transition deal at the rates meeting, but gave no comment on its effect on the economic outlook.

Ian McCafferty and Michael Saunders - who were the first officials to call for rates to rise in 2017 - said it was now time for rates to increase again for only the second time since the 2008 financial crisis.

The Bank of England has kept interest rates unchanged at 0.5%. The unemployment rate remained low in the three months to January.

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The Bank of England said this had given a boost to sterling. "And if the economy continues to surprise on the upside. that should allow the MPC to raise interest rates twice more before the end of this year".

"All these factors paint a positive outlook for the Pound and shape expectations for a bullish BoE message which will underpin investors" hopes for a rate hike soon'.

However, Neil Jones, head of hedge fund FX sales at Mizuho Bank, said the pound fell after the initial jump because the BoE had reiterated that rate hikes would be "gradual".

An obstacle was overcome this week when Prime Minister Theresa May secured a transition agreement with the European Union to maintain the same trade relations between the United Kingdom and the EU for 21 months after Brexit which is just a year away.

As such, the Reserve Bank of Australia (RBA) is now seen as unlikely to be considering near-term monetary policy adjustment. Wages are picking up, suggesting consumer spending may strengthen.

On Thursday, the BoE said economic developments since then broadly backed up this view.

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