BoE left Bank rate unchanged at 0.10% by unanimous vote. Asset purchase target was held at GBP 895B, by 701 vote. Michael Saunders was the only MPC member who voted for tapering to GBP 850B. BoE noted that the Committee will focus on “medium-term prospects for inflation”, but “will not put undue weight on capacity pressures that are frictional in nature and likely to be temporary.” Though, there remain “two-sided risk” around central path for medium term inflation and risk management considerations “continue to have some force”.
BoE also said that GDP is expected to grow by around 3% in Q3, with just a “small negative impact from recent developments in the pandemic”. GDP is projected to “recover further over the remainder of the year”, and reaches its prepandemic level in 2021 Q4. CPI inflation is projected to “temporarily” rise to 4% in Q4, but that falls back to close to the 2% target.
