principally the bank rate -- could be utilized again in the future.
The MPC has assumed that the fall in sterling will boost exports and lower imports.
It also assumes that the sterling fall is connected with market pessimism about UK-EU Brexit negotiations, and that firms will make more significant decisions than previously thought based on the assumption that future EU market access will be restricted.
The benefits to net trade of the 6.5 percent fall in sterling since the last forecast in August are offset by the assumption of the effect on firms' decision making which will weigh on investment.
This period of low investment will "reduce growth in the capital stock and therefore productivity".
GDP GROWTH FORECAST INCREASED, HOUSEHOLD SPENDING SLOWDOWN
Economic growth is forecast to strengthen compared with the August report, reaching 2.2 percent of GDP in 2016 (August 2 percent), and 1.4 percent in 2017 (August 0.8 percent).
However, growth is lower for 2018 at 1.5 percent (August 1.8 percent) and the same for 2019 at 1.6 percent.
"Lower sterling exchange rate supports net trade but... companies begin to adjust activity in light of anticipated changes to future trading relationships," the report noted.
It also noted that there was "little impact" yet from the Brexit vote on household spending, the main driver of economic growth, But it forecast that there would be an impact; nominal wage growth would remain modest, and employment growth would slow, but the impact of rising inflation from increased import costs would cut household spending, with a forecast of just 1 percent growth in consumer spending which is well below historical average rates.
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