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Bank of England lifts UK third-quarter growth forecast

Bank officials now expect that the economy will grow by 0.3% in the third quarter, up from a previous forecast of just 0.1%.

The Bank of England has lifted its forecast for UK GDP after signs the economy did not slow as much as feared after the Brexit vote.

It scaled back its expectations of a sharp slowdown following the poll and increased its third-quarter growth forecast for gross domestic product from 0.1% to 0.3%.

However it signalled that it was still likely to cut interest rates again, to near-zero, in November.

The comments came as the Bank announced that, for now, interest rates were to be left on hold at 0.25%.

All nine members of the Bank’s Monetary Policy Committee (MPC) voted for no change to rates and its money-printing quantitative easing (QE) policy – which was last month increased to £435bn.

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Rates were slashed to a new record low in August as part of a package of stimulus measures, including the boost for QE.

The Bank is seeking to cushion the economy from an expected blow caused by June’s referendum.

But it said that since its quarterly Inflation Report last month “a number of indicators of near-term economic activity have been somewhat stronger than expected”.

The Bank of England is seen in the City of London in London, Britain August 4, 2016. REUTERS/Neil Hall

“The committee now expect less of a slowing in UK GDP growth in the second half of 2016,” the Bank said.

It pointed to the outlook for the housing market being “less negative than expected” and consumer demand being stronger than expected.

But the MPC said its view of the “contours of the economic outlook” following the referendum had not changed.

It said a majority of members still expect to back a further rate cut later this year if this outlook remains broadly the same.

Bank governor Mark Carney has been criticised by pro-Brexit politicians over warnings before the poll that a Leave vote could push the economy into recession.

He recently defended his actions and claimed that much of the credit for the post-referendum bounce-back could be credited to the Bank’s interventions.

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