Bank of England Holds Base Rate at 0.15%, Target Asset Purchases at £895 billion

The Bank of England MPC at it’s March meeting voted unanimously to maintain Bank Rate at 0.1%. The Committee voted unanimously to maintain corporate bond purchases at £20 billion and government bond purchases at £875.

The Bank of England MPC at it’s March meeting voted unanimously to maintain Bank Rate at 0.1%. The Committee voted unanimously to maintain corporate bond purchases at £20 billion and government bond purchases at £875.

 BankofEngland

Highlights:

Bank of England announced  17 March 2021 monetary policy decision

  • Unchanged at prior 0.10%
  • Official bank rate votes 0-0-9 vs 0-0-9 expected
  • Asset purchase target £875 bn vs £875 bn expected
  • Corporate bond target £20 bn vs £20 bn expected

Statement Breakdown 

  • The rates of Covid infections and hospitalisations have fallen markedly across the United Kingdom and the vaccination programme is proceeding at a rapid pace.
  • Budget 2021, published in March, contained a number of significant new policy announcements, including the extension of the Coronavirus Job Retention Scheme and other measures to support the economy in the near term which had not been reflected in the February Report.
  • UK GDP fell by 2.9% in January. This was less weak than expected, due mainly to developments in public sector output, but still leaves GDP around 10% below its 2019 Q4 level.
  • The LFS unemployment rate rose to 5.1% in the three months to December, but it is likely that labour market slack has remained higher than implied by this measure.
  • Twelve-month CPI inflation rose slightly to 0.7% in January.
  • The weakness of recent outturns has largely reflected the direct and indirect effects of Covid on the economy, in particular the decline in oil prices seen in early 2020. A
  • s has been the case in recent MPC projections, CPI inflation is expected to return swiftly to around the 2% target in the spring, as the effects of those earlier falls in oil prices drop out of the annual comparison, and reflecting more recent increases in energy prices.
  • There is judged to be a material degree of spare capacity at present.
  • The outlook for the economy, and particularly the relative movement in demand and supply during the recovery from the pandemic, remains unusually uncertain..

Source: Bank of England

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