BoE kept Bank Rate unchanged at 0.1% as widely expected. The target of asset purchases was also held at GBP 745B. Both decisions were made by unanimous votes. The central bank pledged to continue to “monitor the situation closely and stands ready to adjust monetary policy accordingly to meet its remit”. It “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.”
The central bank also noted that “recent domestic economic data have been a little stronger than the Committee expected” at the time of the August Monetary Policy Report. However, “it is unclear how informative they are about how the economy will perform further out.” Recent increases in coronavirus cases is some parts of the world “have the potential to weigh further on economic activity”. Meanwhile, “there remains a risk of more persistent period of elevated unemployment”.
In the minutes, it’s noted that the Committee “had discussed its policy toolkit, and the effectiveness of negative policy rates”. The MPC had been briefed on the plans to explore how a negative Bank Rate could be implemented effectively, should the outlook for inflation and output warrant it at some point during this period of low equilibrium rates.”
