The Bank of England held interest rates on Thursday and said weak growth during a snowy start to 2018 was likely to be only temporary, but it wanted to see a pick-up in the economy in the next few months before raising borrowing costs.

In sharp contrast to widespread expectations just a few weeks ago that it would raise rates, the BoE said its nine rate-setters voted 7-2 to keep them at 0.50%.

Investors responded to the announcement by slightly pushing back their expectations of when the BoE was likely to raise rates for only the second time since the global financial crisis.

Britain's economy grew more slowly than most of its peers last year after a Brexit-driven jump in inflation hit consumer spending power and some businesses delayed long-term investment.

Growth slowed even more sharply in the first quarter of 2018 due to a mix of unusually snowy weather and headwinds from Britain's impending exit from the European Union. Surveys have suggested little rebound last month.

The BoE on Thursday cut its forecasts for inflation and for growth, especially in 2018, reflecting the weak first-quarter figures which the central bank said would probably be revised up.

For now, most policymakers wanted to wait to be sure that the weakness passes quickly. "There was value in seeing how the data unfolded over the coming months, to discern whether the softness in the first quarter might persist," they said.

This potentially leaves the door open for a rate rise in August, the next time the BoE updates its economic forecasts.

Policymakers Ian McCafferty and Michael Saunders, who again voted for a rate rise, agreed the weak growth so far this year reflected "temporary or erratic factors", but said delaying a rate hike risked more abrupt tightening later on.

The central bank said on Thursday that inflation had fallen faster than it expected. But this was due to a faster fading of the impact of the plunge in sterling on the price of imports, and that domestic inflation pressures continued to rise.

Inflation was seen dropping to 2.1% in a year's time, and returning to target a year later - sooner than previously thought - but only if interest rates rose by 25 basis points about three times over the next three years, as markets expect.

The BoE said it expected Britain's economy would grow by 1.4% this year, down from the 1.8% rate it predicted in February, which was a bit above what most economists thought likely at the time.

But slowing consumer lending and a sluggish housing market created greater-than-usual uncertainty about consumer demand, the BoE said. For 2019 and 2020, it predicted GDP growth would pick up to 1.7%, down from 1.8% in its February forecasts.

Bank of England Governor Mark Carney said on Thursday the economic outlook for Britain remained clouded by uncertainty about the terms of its departure from the European Union. "Despite the welcome agreement on a transition period, the terms on which the UK will trade with the EU beyond that period remain to be determined."

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