News

Bank of England Keeps Dovish Tone
The Bank of England voted unanimously to keep its benchmark interest rate on hold at a record low of 0.1 percent during its June 2021 meeting, and by a majority of 8-1 to leave its bond-buying programme unchanged as widely expected. The central bank also reiterated it 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 percent inflation target sustainably. Policymakers said the economy would experience a temporary period of strong GDP growth following the relaxation of restrictions on economic activity, after which it will fall back. At the same time, CPI inflation is expected to pick up further above the target, owing primarily to developments in energy and other commodity prices, and is likely to exceed 3 percent for a temporary period, before returning to around 2 percent in the medium term.
Published on 2021-06-24

No Changes Expected from the BoE
The Bank of England is seen leaving its key rate unchanged at a record low of 0.1% and bond purchases at £3.4 billion per week in June. However, investors expect policymakers to give more clues on the economic outlook and acknowledge inflation is on the rise and the GDP rebound is surprisingly stronger-than-anticipated. Pressure is mounting on the central bank to take some action and change the rhetoric over inflation, specially after the Fed's hawkish shift last week. Still, the BoE will likely hold hold the current policy stance until at least August. June is also the last monetary policy meeting of Andy Haldane, the bank's chief economist, who has been warning that inflation threatens to overheat the UK economy.
Published on 2021-06-24

BoE Slows Bond-Buying, Hikes 2021 GDP Forecast
The Bank of England kept its monetary policy unchanged during its May 2021 meeting, and announced a slowdown in the pace of purchases of British government bonds to £3.4 billion per week, from £4.4 billion previously, signaling it is on course to end emergency support later this year. The central bank raised 2021 GDP forecast sharply to 7.25 percent from its previous estimate of 5 percent growth, citing easing restrictions on economic activity and the country's fast rollout of COVID-19 vaccinations. For 2022, however, the economy is seen expanding 5.75 percent, less than February's projections of 7.25 percent. The central bank also said it 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 percent inflation target sustainably.
Published on 2021-05-06

BoE to Hold Rates, Raise 2021 GDP Forecast
The Bank of England is expected to keep its benchmark interest rate and its bond-buying programme unchanged during its May 2021 meeting, but it could be one of the first central banks to signal tightening monetary policy as the country's economic recovery accelerates and inflation rises. The central bank is expected to raise 2021 GDP forecast sharply from its previous estimate of 5% growth, helped by the re-opening of the economy and the rapid pace of COVID-19 vaccinations. On Wednesday, investors were pricing in a 15 basis-point increase in interest rates by September 2022, while last month they were expecting a first rate hike only in 2023.
Published on 2021-05-06

BoE Leaves Monetary Policy Unchanged
The Bank of England voted unanimously to keep its benchmark interest rate on hold at a record low of 0.1 percent and to leave its bond-buying programme unchanged during its March 2021 meeting, saying the UK GDP was projected to recover strongly over 2021 towards pre-Covid levels and CPI inflation was expected to return towards the 2 percent target in the spring. Policymakers continued to envisage that the pace of government bond purchases could remain at around its current level, with flexibility to slow it later; but signaled that the central bank stood ready to increase the pace to ensure the effective transmission of monetary policy. The central bank also said it 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 percent inflation target sustainably.
Published on 2021-03-18

No Major Changes Expected from the BoE
The Bank of England is expected to leave the Bank Rate at a record low of 0.1% and the size of its bond-buying program unchanged at £875 billion during its March 2021 meeting. The outlook improved since last month as the economy is reopening after a nationwide lockdown, the vaccine rollout keeps going and more than a third of the UK population has received a vaccine, and more fiscal support has been announced including an extension of furlough payments. Still, investors will be looking for any clues on the central bank's view regarding the recent rise in bond yields although BOE Governor Andrew Bailey recently highlighted it as a sign of economic optimism. The BoE last voted unanimously to keep monetary policy unchanged during its February meeting.
Published on 2021-03-18

BoE Holds Rates
The Bank of England voted unanimously to keep its benchmark interest rate on hold at a record low of 0.1 percent and left its bond-buying programme unchanged during its February meeting. Policymakers noted it would be appropriate to start the preparations so that it could set a negative rate in 6 months, but stressed it should not be interpreted as a signal. The central bank also said that the coronavirus vaccine rollouts in a number of countries, including the United Kingdom, have improved the economic outlook, but voiced concerns about the recent increase in cases, including from newly identified strains of the virus, and the associated reimposition of restrictions.
Published on 2021-02-04

BoE to Report Details on Negative Rates
The Bank of England is expected to leave the Bank Rate at a record low of 0.1% and the size of its bond-buying program unchanged at £875 billion during its first meeting of 2021. However, investors will keep a close eye on BoE’s quarterly outlook and the result of a feasibility study of negative interest rates. The central bank is not expected to cut rates below 0% soon but the central bank will most likely not rule out their use in the future. Traders will also be looking for any updates on the near term outlook as the UK remains under a national lockdown. The bank will likely upgrade its forecasts for 2020 but downgrade forecasts for the year ahead.
Published on 2021-02-04

BoE Leaves Rates and Asset Purchases Unchanged
The Bank of England voted unanimously to maintain Bank Rate at a record low of 0.1% and the size of its bond-buying program at £875 billion during its December meeting, as policymakers took a wait-and-see approach amid uncertainty surrounding a post-Brexit trade deal and concerns over the coronavirus situation. Still, the central bank noted that the successful trialing of some Covid vaccines and initial plans to roll them out widely over the first half of next year will likely reduce the downside risks to the economic outlook. Looking ahead, officials pledged to take whatever additional action is necessary to achieve the 2% inflation target, in a way that helps to sustain growth and employment. CPI inflation is expected to rise quite sharply towards the target in the spring, as the VAT cut comes to an end and the large fall in energy prices earlier this year drops out of the annual comparison.
Published on 2020-12-17

BoE Seen Leaving Monetary Policy Steady
The Bank of England is seen taking a wait-and-see approach during its last monetary policy meeting of 2020 as it is still uncertain if there would be a post-Brexit trade agreement. Policymakers are expected to leave the benchmark interest rate at a record low of 0.1% and the bond-buying programme at £875 billion, after extending it by a larger-than-expected £150 billion in November. Still, investors will be looking for more guidance on this additional stimulus and any clues over how to implement negative interest rates as the key bank rate is likely to be cut to -0.1% next year.
Published on 2020-12-17

BoE Increases Bond-Buying
The Bank of England left its Bank Rate at a record low of 0.1% on November 5th 2020 and increased the size of its bond-buying program by a larger-than-expected £150 billion to £875 billion, as the country entered a new coronavirus lockdown. Policymakers noted that there has been a rapid rise in rates of Covid infection and the UK Government has responded by increasing the severity of Covid restrictions. Also, consumer spending has softened across a range of high-frequency indicators, while investment intentions have remained weak. The central bank sees the economy shrinking by 11% in Q4 2020, much worse than a 5.4% drop projected in August and to grow by a stronger 11% in Q4 2021. Inflation is expected higher at 0.6% in Q4 2020 (vs 0.3% in August) and the unemployment rate is seen lower at 6.3% (vs 7.5%). The key bank rate is expected to remain steady at 0.1% through the rest of 2020 but is likely to be cut to -0.1% next year.
Published on 2020-11-05

BoE Keeps Policy Steady, Considers Negative Rates
The Bank of England voted unanimously to maintain Bank Rate at a record low of 0.1% and the size of its bond-buying program at £745 billion during its September meeting. Policymakers noted that domestic economic data have been a little stronger than expected in August, while the outlook for the economy remains unusually uncertain due to the coronavirus pandemic and recent Brexit developments, leaving the door open to negative interest rates and more QE. CPI inflation is expected to remain below 1% until early 2021 and unemployment will probably remain elevated for some time. The central bank also 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% inflation target sustainably.
Published on 2020-09-17

BoE to Hint at More Stimulus
The Bank of England will likely leave the bank rate at a record low of 0.1% on Thursday and the size of its bond-buying program at £745 billion. Still, the central bank is expected to set the stage for more stimulus measures as the country faces greater instability amid a no-deal Brexit concerns, rising unemployment and coronavirus infections. Many economists expect the bank to take concrete action only in November as the outcome from post-Brexit trade talks becomes more clear, and the UK’s furlough scheme ends.
Published on 2020-09-17

BoE Holds Rates, Says UK Recovery Will Take Longer
The Bank of England voted unanimously to maintain the key bank rate at a record low of 0.1% and the size of its bond-buying program at £745 billion as expected during its August meeting. Policymakers said Britain's economy will take longer to recover from the coronavirus-induced recession than initially thought and warned about the risks of cutting interest rates below zero. Meanwhile, the central bank said CPI inflation is expected to fall further below the 2% target, largely reflecting the direct and indirect effects of Covid-19.
Published on 2020-08-06

BoE Expands Bond-Buying as Expected
The Bank of England voted unanimously to maintain the key bank rate at a record low of 0.1% on June 18th 2020, in line with market forecasts. Policymakers also voted by a majority of 8-1 to increase the target stock of purchased UK government bonds, financed by the issuance of central bank reserves, by an additional £100 billion, to take the total stock of asset purchases to £745 billion. The programme is expected to be complete around the turn of the year. The central bank will continue with the existing programme of £200 billion of UK government bond and sterling non-financial investment-grade corporate bond purchases. Policymakers added that the fall in global and UK GDP in Q2 will be less severe than anticipated although the outlook remains unusually uncertain and the economy, and especially the labour market, will therefore take some time to recover. The central bank stands ready to take further action as necessary to support the economy, officials added.
Published on 2020-06-18

BoE Expected to Expand Bond-Buying Program
The Bank of England is expected to increase its asset-purchase program by at least GBP 100 billion on June 18th 2020, aiming to support the UK economy and ensure stability of financial markets. The additional stimulus would complement the GBP 200 billion announced in March when the coronavirus pandemic started, bringing total bond purchases to GBP 745 billion. At the same time, the central bank is seen extending the QE programme beyond July. Meanwhile, the bank rate is expected to be left at a record low of 0.1 percent. The Bank of England voted unanimously to maintain the key bank rate at a record low of 0.1% on May 7th 2020, in line with market forecasts.
Published on 2020-06-18

BoE Holds Rates, Stands Ready for Further Stimulus
The Bank of England voted unanimously to maintain the key bank rate at a record low of 0.1% on May 7th 2020, in line with market forecasts. Policymakers also left the bond buying program at £645 billion, although two members voted for a £100 billion increase, in a further sign that fresh stimulus may be under way. The central bank expects the GDP to contract by 14% in 2020 due to the coronavirus pandemic. The inflation rate is seen falling to 0.6% and unemployment is like to rise to 8%.
Published on 2020-05-07

BoE Holds Interest Rates at Record Lows
The Bank of England's MPC voted unanimously to hold the Bank Rate at an all-time low of 0.1 percent during its scheduled March meeting, with policymakers taking a wait-and-see approach to monetary policy after delivering two emergency cuts this month in response to the severe economic and financial disruption caused by the spread of Covid-19. The bank also said the UK GDP is seen falling sharply during the first half of the year and unemployment is likely to rise rapidly across the country. Policymakers pledged to take further action if needed to guard against an unwarranted tightening in financial conditions, and support the economy.
Published on 2020-03-26

BoE to Leave Monetary Policy Unchanged
The Bank of England is likely to hold interest rates at record lows on Thursday as policymakers take a wait-and-see approach to monetary policy after delivering two emergency cuts this month. Still, officials are seen reiterating they are determined to take further action to support the economy hurt by the Covid-19 crisis, with possible measures including a further increase in their quantitative easing programme. Governor Andrew Bailey and other policymakers have suggested they will not lower the Bank Rate into negative territory.
Published on 2020-03-26

BoE Cuts Rates to New Lows in Emergency Move
The Bank of England lowered the key interest rate to 0.1 percent at a special meeting on March 19th. It follows a 50bps cut last week, bringing borrowing costs to a fresh record low. The central bank said the spread of Covid-19 and the measures being taken to contain the virus will result in an economic shock that could be sharp and large, but should be temporary. The central bank also announced it will increase its holdings of UK government and corporate bonds by £200 billion.
Published on 2020-03-19