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Royal Bank of Scotland agreeing a $4.9bn (£3.6bn) penalty with US regulators is "an important turning point" for the bank, says Jane Sydenham, investment director at Rathbones.

"It... puts the Treasury in a much clearer position to sell their stake, as buyers would be reluctant if there were still significant fines to pay," she says.

However, the bank will still have suffered reputation damage, she says.

"It’s not that the current penalty will be the issue for RBS, as they have plenty of capital. It’s that RBS have had a whole series of fines, for a number of different reasons over a protracted period of time, so the true cost has been the damage to their reputation," she says.

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During the Bank of England's press conference, Ben Broadbent, deputy governor for monetary policy, said all early estimates should be treated with a "degree of caution".

On the latest GDP figures, which are based on just 44% of available data, Mr Broadbent said the first quarter estimate of 0.1% was just that - one estimate.

He added: "We can be fairly confident that will be revised."

He said that looking at previous quarters where there has been heavy snow, the average revision to construction output has been around four percentage points.

Construction knocked 0.2 percentage points off economic growth in the first quarter, according to the Office for National Statistics.

Mr Broadbent said it was "inevitable" that data got revised because statisticians learned more over time. That's why policymakers looked at surveys and talked to businesses.

No numbers should be treated as "given and fixed", said Mr Broadbent.

Kamal Ahmed
Economics editor

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It all seemed a lot clearer in February. At the publication of its economic health check three months ago, the Bank gave a clear signal that interest rates would rise rather more quickly than expected.

Global growth was strong and the UK economy was caught in its positive tailwind.

Real incomes were starting to rise and inflation was still stubbornly above the 2% target.

Commentators started talking confidently of a rate rise this month and another one in the autumn.

The markets were so bullish they priced in a 90% probability of a hike before today was out. All such talk has withered.

Today the Bank struck a much more doveish note on the future path of interest rate rises - a doveish note first revealed by Mark Carney in his BBC interview last month.

The judgement has to be now that the next interest rate increase - unless there is a strong bounce back in the economy or inflation starts rising substantially again - will be far later this year.

Read more here.

Szu Ping Chan
Business Reporter

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While the Bank of England downgraded its 2018 economic growth forecast to 1.4%, from a previous projection of 1.8%, it said some rate rises would be needed over the next three years to prevent the economy from overheating.

Here are four things you need to know from the Bank's latest Inflation Report:

1. The UK snow-related growth slowdown is temporaryThe Bank said heavy snowfall did have an impact on growth in the first quarter, slowing it down by over 0.1 percentage points.
2. Near term inflation squeeze won't lastThe Bank expects inflation to ease further, to 2.4% in April, before climbing back up to 2.5% in June, mostly due to higher oil prices.
3. Jobs market to remain strongThe Bank said there were "now signs that regular pay growth is starting to rise more broadly as the labour market tightens further".In other words, there are more jobs to fill than there are people to fill them, so employers have to pay staff more to attract or keep them from leaving.
4. Consumer demand could remain 'lacklustre'Consumer credit, which includes borrowing on credit cards and personal loans, had "fallen markedly in March" which it said appeared "consistent with weaker household demand.While the Bank said the housing market remained "soft", with fixed rate mortgage rates on the rise, it added that most mortgage rates were still lower than they were two years ago.

Szu Ping Chan
Business Reporter

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The Bank of England's press conference continues.

The governor is asked how the Bank would react to a "hard Brexit" where the UK is forced to trade under World Trade Organisation (WTO) rules?

Mr Carney says policymakers would change their forecasts for economic growth, jobs and inflation. He adds that other than this, the Bank is responsible for ensuring that the UK's financial system can withstand even the biggest of shocks.

He says the Bank's regulators are ensuring banks are well capitalised, even for the "worst case scenario".

Beyond this, policymakers are "not going to put out a forecast of various outcomes, that's the responsibility of the Government if it so chooses".

Image source, Rolls-Royce Motor Cars

Rolls-Royce has become the latest luxury car maker to launch an SUV.

Chief executive Torsten Müller-Ötvös said the new Cullinan, which will cost more than £200,000, was a "seminal" moment and probably the "most anticipated" Rolls-Royce ever.

Bentley and Lamborghini have already launched SUVs, while Ferrari will follow next year.

Automotive analysts said Rolls, which is owned by BMW, had to follow suit to keep up with changing consumer demand.

Szu Ping Chan
Business Reporter

Image source, Getty Images

Since last August, mortgage rates have gone up at a much faster pace than savings rates.

For example, while a two-year fixed rate mortgage for someone with a 60% deposit now pays an average 1.74% interest rate, compared with 1.24% in August, the average interest rate on an instant access savings account has gone up to just 0.21%, from 0.14% over the same period.

So are banks and building societies treating customers fairly?

Sir Dave Ramden, the Bank's deputy governor for markets and banking, says policymakers had expected this trend. Most people who own an instant access savings account "typically don't get full pass-through" when the Bank raises its base rate, he says.

Szu Ping Chan
Business Reporter

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After a series of questions where Mr Carney insists that the central message of the Bank remains unchanged on interest rates, he is asked if an environment of softer economic growth and more subdued inflation will result in weaker pay growth?

Mr Carney says regular pay across the economy is currently growing at a slightly faster pace than the Bank predicted in February.

Bonus payments are lower, but he describes this as a "distraction". He says these payments go up and down so people shouldn't become "overly fixated" on this.

However, he notes that because productivity growth is weak, pay rises are unlikely to climb back up to the same rates as seen before the financial crisis.

Average weekly earnings are expected to grow by 3.25% next year, which remains below the pre-crisis average of 4.25%.

PwC economist Andrew Sentance, a former MPC member, has accused the committee and the Governor of misunderstanding the UK economy

Szu Ping Chan
Business Reporter

Image source, Kyle Moore

Why has the bank had to adjust its view on interest rates in recent months?

Mr Carney says financial markets are influenced by a combination of factors, including what's going on in the European economy more broadly, as well as "animal spirits" in businesses, "the progress of Brexit negotiations or all of the above".

He says just as traders make judgements about the economy, so does the Monetary Policy Committee (MPC) that sets interest rates.

He says most of the nine members of the Committee are looking for more evidence of whether the slowdown is temporary or signals broader sluggishness.

Challenged about claims he's sent mixed messages on rates, Mr Carney says it's only the media who call him an "unreliable boyfriend".

"People don't expect us to be on some preset course, they expect us to be prudent not passive," he says.

If the situation requires it the bank must adjusts its stance, he says.

He also says that the British people fully expect rates to rise over the next few years, as the bank as indicated.

Analysts have chided Mr Carney in recent months for sending mixed messages about the Bank's rate rising intentions, and that scepticism is on show again today:

Szu Ping Chan
Business Reporter

Mr Carney adds a note of caution about Brexit.

He says that while the storms of the first three months of the year have "given way to sunnier skies" those skies "remain clouded" by Brexit uncertainties.

He says the UK's future trading relationship with the EU remains to be determined, and as negotiations progress, the medium term economic climate will become clearer.

Szu Ping Chan
Business Reporter

Mr Carney says even though growth might seem subdued, the economy is likely to grow faster than its speed limit in the medium term.

Modest productivity growth - which determines everything from company profits to pay rises, tax revenues and economic growth - suggests the economy is at risk of overheating if the Monetary Policy Committee doesn't raise interest rates over the next three years.

Steady growth and rising wages will mean a "modest tightening" of monetary policy will be needed to ensure that inflation, which currently stands at 2.5%, will return back to the Bank's 2% target in a sustainable way.

Szu Ping Chan
Business Reporter

Governor Mark Carney says back in February, policymakers said that they would continue to raise interest rates if the economy continued to grow at the steady pace it predicted.

Since then, the economy "hasn't fulfilled those conditions".

He says the key question is whether this slowdown is temporary or signals a broader slowdown. He says the evidence suggests the former is more likely.

He says the adverse weather is now "behind us". Mr Carney says wages up, while the jobs market stronger than previously thought. There is also "widespread evidence" in surveys that the labour market is tightening.

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Bank of England governor Mark Carney is giving a press conference about the Bank's decision to keep rates on hold.

He attributes the decision to mixed data on the economy in the first quarter of the year, notably GDP growth of just 0.1% following the extreme weather of February and March.

However, he strikes a relatively upbeat tone about the future, saying business investment is likely to pick up and consumer spending will increase as real wages increase.

Szu Ping Chan
Business Reporter

Financial markets believe the next interest rate rise to 0.75% will be "around the turn of the year". Investors have priced in three rate rises over the next three years.

Two external policymakers, Ian McCafferty and Michael Saunders, continued to vote for a rate rise in May.

Mr McCafferty will leave the Monetary Policy Committee (MPC) that sets interest rates this summer.

According to the minutes of this month's meeting, the other seven members, including Governor Mark Carney, are waiting for more data before they vote for a rate rise.

The minutes said: "For these members, there was value in seeing how the data unfolded over the coming months, to discern whether the softness in Q1 might persist, and to learn more about the extent to which the economy was evolving" in line with its forecasts for the economy.

In other words, they're in wait-and-see mode.

The pound has slipped on the news that the Bank of England has chosen not to raise interest rates, falling 0.2% against the dollar to $1.3524.

Image source, BoE

As mentioned, the economy unexpectedly slowed in the first quarter. And the minutes from the MPC's meeting today show it wants to wait and see how the economy performs over the coming months.

While they expect it to recover from a weak start to the year, there is a risk that the slowdown could be more persistent.

The course of interest rates also depends on inflation falling in line with the Bank’s expectations.

In March inflation was running at an annual rate of 2.5%, which is above the Bank’s target of 2%.

But in its most recent Quarterly Inflation Report the Bank blames above-target inflation on higher prices of imported goods caused by a weaker pound.

However, the Bank expects that effect to fade over the coming years, bringing inflation back to 2% by early 2021.

According to Tim Bennett, a partner at Killik and Co, although the interest rates have not risen today, a rate rise is still on the horizon.

"Long-suffering savers will be disappointed that rate rises have been put on hold. Meanwhile borrowers will be breathing a temporary sigh of relief," he said.

“A rate rise freeze was expected, in light of recent weak economic data, but borrowers should not rest easy as rates remain well below their long-term norm. Another rise is most likely a question of when, not if.”