Sterling slides as BoE points to mid-2016 rate hike; Inflation 'to return to target' in 2017

Sterling has fallen after the Bank of England downgraded its growth forecasts for the UK economy while indicating it could start to raise interest rates in mid-2016.

In its latest quarterly Inflation Report, the central bank cut its projection for UK GDP growth for 2015 to 2.5%, from 2.9% in February. Governor Mark Carney (pictured) said although UK growth had been boosted by the European Central Bank's quantitative easing programme and strong consumer confidence, there are still significant headwinds such as slower productivity and supply growth, and the current account deficit. Carney said although the adjustments reflect a "moderately weaker outlook" there are signs economic growth is "set to re-accelerate" after a softer first quarter. "Eur...