LONDON (CU)_ The British Central Bank decided to keep its key interest rate at a record low of 0.1 per cent while leaving its vast quantitative easing stimulus at £895 billion (S$1.67 trillion).
The Bank of England said that its Monetary Policy Committee (MPC) voted unanimously to keep this rate at a record low with the economic outlook boosted by one of the fastest COVID vaccination drives, along with lockdown-easing plans.
Moreover, Prime Minister Boris Johnson’s plans to end COVID-19 lockdown are expected to deliver a stronger consumer spending than previously anticipated. However, the bank, whose responsibility is to keep 12-month inflation close to the 2.0 per cent, warned that this level would only be reached in the spring, particularly owing to the surge in domestic energy prices.
“The MPC will continue to monitor the situation closely. If the outlook for inflation weakens, the committee stands ready to take whatever additional action is necessary to achieve its remit,” the BoE said.
“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 2.0 per cent inflation target sustainably.”
Nevertheless, the bank added that with Britain’s rapid and successful Coronavirus vaccination programme currently underway, the country’s economic growth in the second quarter is expected to be stronger than previously anticipated in February.
Yet the BoE noted that the long term outlook as a result of the pandemic continues to depend on several factors which evolve around the post-pandemic recovery.
“The outlook for the economy, and particularly the relative movement in demand and supply during the recovery from the pandemic, remained unusually uncertain,” the bank said.
“It continued to depend on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets responded to these developments.”
