BoE Holds Rate At Record Low; QE At GBP 745 Bln
Policymakers of the Bank of England unanimously decided to hold its record low interest rate and quantitative easing unchanged on Thursday.
The nine-member Monetary Policy Committee unanimously voted to hold the interest rate at 0.10 percent, as widely expected. The bank had altogether reduced the rate by 65 basis points at two unscheduled meetings in March.
The bank retained the size of the asset purchase programme at GBP 745 billion.
The Committee judged that the existing stance of monetary policy remains appropriate.
The MPC said 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 percent inflation target sustainably.
CPI inflation is expected to remain below 1 percent until early 2021, albeit slightly higher than expected at the time of the August Report.
Policymakers noted that the outlook for the economy remains unusually uncertain.
According to bank staff, in the third quarter of 2020, GDP would to be around 7 percent below its 2019 fourth quarter level, but less weak than had been expected in the August Report.
The MPC had been briefed on the BoE’s 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.