04.02.202111:39:00UTC+00Bank Of England Keeps Rates Steady

Bank of England policymakers unanimously decided to retain the record low UK interest rate and quantitative easing amid a third lockdown to curb the coronavirus.

The nine-member monetary policy committee headed by Governor Andrew Bailey voted to hold the interest rate at 0.10 percent and the quantitative easing at GBP 895 billion.

On negative interest rate, the MPC said it did not wish to send any signal that it intended to set a negative Bank Rate at some point in the future. It concluded overall that it would be appropriate to start the preparations to provide the capability to do so if necessary in the future.

The economy is expected to fall by around 4 percent in the first quarter of 2021, in contrast to expectations of a rise in the November Report.

According to latest Monetary Policy Report, GDP is projected to recover rapidly towards pre-Covid levels over 2021, as the vaccination programme is assumed to lead to an easing of Covid-related restrictions and people's health concern. Consumer price inflation is forecast to rise quite sharply towards the 2 percent target in the spring, as the reduction in VAT for certain services comes to an end and given developments in energy prices.

Inflation is projected to be close to 2 percent over the second and third years of the forecast period.