While still comfortably above the level of 50 that denotes expansion, this sharp decline reinforces our view that the European Central Bank will be in no rush whatsoever to raise interest rates until well into 2019.
One of Gordon Brown's first moves as chancellor in 1997 was to hand control of interest rates to an independent Bank of England.
Investors had their hopes of an interest rate rise in May stoked this afternoon, as one Bank of England policymaker indicated he would back a hike at the monetary policy committee's next meeting.
The BoE's Monetary Policy Committee voted 7-2 to keep rates at 0.5 percent but said "ongoing tightening" was likely to be needed to return inflation, which stood at 2.7 percent in February, back to its 2 percent target.
Ian McCafferty and Michael Saunders - who were the first to call for a rate rise previous year - are seen as outside candidates to vote for a rate rise this month.
The bank's announcement was largely in line with market forecasts, although most BoE watchers expected a unanimous decision from the MPC to leave policy alone. "All members agreed that any future increases in bank rate were likely to be at a gradual pace and to a limited extent".
This could discourage the BoE from continuing to pursue a course of tighter monetary policy, given the significant impact that Brexit-based uncertainty could still have on the strength of the domestic economy.
Some economists think data earlier this week showing a bigger-than-expected drop in inflation to 2.7 percent suggests the BoE is too gloomy, and will remove the need for the BoE to raise rates a couple of times this year.
The UK's unemployment rate has meanwhile dipped, reverting to the lowest level since 1975, after a brief rise.
Ian McCafferty and Michael Saunders argued that a "modest tightening. could mitigate the risks from a more sustained period of above-target inflation that might necessitate a more abrupt change in policy and hence a greater adjustment in growth and employment". But a pick-up in wage growth points to an erosion of slack in the labour market.
Britain's vote in June 2016 stoked inflation as the ensuing drop in the value of the pound raised the price of imported goods.
The Bank of England has set up a new Fintech Hub to consider how the Bank understands and applies technology in financial services.
In February, Mark Carney, governor of the Bank of England, shocked markets when he announced that interest rates may need to be increased sooner and by more than was initially anticipated. South African Rand to Pound Exchange Rate Stays Flat on Mixed Retail Sales DataThe Rand to Pound exchange rate (ZAR/GBP) has been close on 22nd March, following the news that South African retail sales levels have improved on the month in January but slowed annually. Sterling traded up 0.3 per cent at $1.4185 at 12:05pm London time.
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