Mounted police officers will be out of the Royal Exchange and Bank of England in London on June 17, 2020.
TOLGA AKMEN | AFP through Getty Images
The Bank of England maintained stable interest rates on Thursday and reflected the proven tone set by the US Federal Reserve in anticipation of a future tightening of monetary policy.
The Central Bank’s monetary policy committee voted unanimously to keep the key lending rate at 0.1% and to keep its target asset purchase stock at £ 895 billion ($ 1.2 trillion).
It comes at a time when bond yields around the world have shifted more in terms of rising inflation expectations and the possibility of central banks tightening monetary policy sooner than expected. On Wednesday, however, US Federal Reserve Chairman Jerome Powell said the Fed did not intend to raise interest rates until 2023, and the Bank of England set a similar tone on Thursday.
“The committee does not intend to strengthen monetary policy at least until there is clear evidence that significant progress is being made in eliminating reserve capacity and achieving the sustainable 2% inflation target,” he said.
The BOE has cut rates twice since the onset of the pandemic from 0.75% and has launched an unprecedented quantitative easing program as it looks set to steer the British economy towards recovery.
There has been growing speculation about reducing the rate in negative territory. Last month, the BOE said British creditors would need at least six months to prepare for a negative interest rate environment, but stressed that it did not intend to implement such a measure imminently.
Since the last MPC meeting, official figures have confirmed that the UK economy has suffered the largest annual contraction in more than 300 years in 2020. However, initial estimates have shown that GDP is shrinking less than expected. in January, despite the fact that the country remained blocked.
In its budget earlier this month, the British government promised to expand its tax support to £ 407 billion in the short term, but outlined a gradual roll-out of measures and a tightening of the public budget.
The UK has also made significant progress in launching vaccines against Covid-19, with more than 24 million people receiving at least one blow.