BoE left monetary policy unchanged as widely expected. Bank Rate is maintained at 0.1%. The asset purchase target is also held at GBP 745B. Both decisions were made by unanimous 9-0 votes. The Committee “does not  intend to tighten monetary policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.

On the economy, BoE expects UK GDP to have bee over -20% lower in Q2, comparing with Q4 2019. GDP is not expected to exceed Q4 2019 level until the end of 2021. Risks to GDP outlook are skewed to the downside. High-frequency indicators imply that “spending has recovered significantly” since April. Though, business investment is “likely to have fallen markedly in Q2” and investment intentions remain “very weak”.

Unemployment rate is projected to “rise materially” to around 7.5% by year end, “consistent with a material degree of spare capacity. CPI is expected fall further below the 2% target and average around 0.25% in the latter part of the year. But CPI is still expected to return to around 2% in two years’ time.

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