BoE kept monetary policy unchanged as widely expected. Bank rate is held at 0.10% on unanimous vote. Asset purchase target was kept at GBP 895B in total. Chief economist Andy Haldane surprisingly dissented, “preferring to continue with the existing programme of UK government bond purchases but to reduce the target for the stock of these purchases from £875 billion to £825 billion.”
The MPC will “continue to monitor the situation closely” and taken whatever action is necessary”. Also, “the Committee does not intend to tighten monetary policy at least 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 said economic activity is expected to “rise sharply” in Q2 and GDP would recovery to pre-Covid level “over the remainder of this year”, in absence of most restrictions.
In the economic projections conditioned on constant interest rate at 0.10%, 2021 GDP growth growth is upgrade to 7.25% (from 5.0%). But 2022 projection was lowed to 5.75% (down from 7.25%). Growth is expected to slow back to 1.25% in 2023.
CPI inflation forecast was raised to 2.50% in 2021 (from 2%), lowered to 2% in 2022 (from 2.25%), and kept unchanged at 2.0% (2023).
