The Bank of England upgraded its outlook for the UK economy on Thursday, but made it clear it was in no hurry to reduce the support and stimulus it was providing to boost the recovery from the coronavirus crisis.
After the March Monetary Policy Committee meeting, the central bank said that financial market moves in the past month, raising sterling and increasing the cost of government borrowing, had been warranted by the better prospects for recovery. It stressed that it saw no medium-term inflation risk for Britain at present.
It reiterated its guidance that it would not tighten monetary policy until there was “clear evidence” that the recovery was eliminating spare capacity in the economy and the MPC was fulfilling its mandate of “achieving the inflation target of 2 per cent sustainably”.
The MPC’s statement said that a more rapid easing of restrictions, a successful vaccine programme and the government’s Budget in the short term was likely to increase the speed of the recovery. The news in the past month, the MPC said, was “consistent with a slightly stronger outlook for consumption growth in 2021 Q2 than was anticipated in the February report”.
At its meeting, the MPC decided unanimously to leave official interest rates at 0.1 per cent and maintain the 2021 programme of creating money and buying an additional £150bn of government debt.
By the end of the year, this quantitative easing programme would leave the BoE sitting on £895bn of assets accumulated under the schemes since 2009.
Source: Economy - ft.com
