The Bank of England scrapped its plan to cut interest rates, which it said could now move up or down, and raised its forecasts for 2017 growth and inflation sharply due to the slide in sterling since Britain's vote to leave the EU, Reuters reported. The battered pound rose and British government bond prices fell after the BoE shifted to what Governor Mark Carney called "a neutral stance" on what its next move would be. The Bank, which has faced political criticism for its near-zero rates, rethought its view on when Britain's economy will feel the pain of June's decision to leave the European Union. In a set of forecasts on Thursday, it largely reversed its previous prediction of a major hit to growth next year which it now saw at 1.4 percent, up from an estimate of 0.8 percent made in August. That represented its biggest ever growth upgrade. But it warned that Britain's access to EU markets could be "materially reduced", which would hurt growth over "a protracted period" and forecast a slower recovery for 2018 and 2019 as significantly above-target inflation squeezed living standards. The BoE responded to the Brexit vote by cutting rates to a record low of 0.25 percent in August and reviving its bond-buying plan. It also said then that another rate cut was likely in 2016 if the economy slowed as it expected. Critics, many of them Brexit supporters, accused Carney and his fellow policymakers of overstating the risks to the economy. Asked by reporters about the big change to the 2017 growth forecast, Carney said in "broad-brush" terms the BoE was sticking to its view of the economy in three years' time. The BoE's nine policymakers all voted to keep rates on hold, in line with a Reuters poll of economists. There was also unanimous support to stick with August's bond-buying plans.
