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Financial News: Bank Of England Holds Rate; QE Amid Covid-19

Bank Of England Holds Rate; QE Amid Covid-19 Pandemic

05/07/2020 - 02:35:00 (RTTNews)

(RTTNews) - The Bank of England maintained its key interest rate and refrained from unveiling additional quantitative easing, despite the coronavirus, or covid-19, pandemic taking its toll on the economy.

The nine-member monetary policy committee voted unanimously to maintain the bank rate at a record low 0.1 percent. The bank had altogether reduced the rate by 65 basis points at two unscheduled meetings in March to combat risks posed by coronavirus to the economy.

The committee voted by a majority of 7-2 to continue with the programme of GBP 200 billion of UK government bond and sterling non-financial investment-grade corporate bond purchases, to take the quantitative easing to GBP 645 billion.

Two members sought an increase in the target for the stock of asset purchases by an additional GBP100 billion.

The policymakers judged that the existing stance of monetary policy is appropriate. In the Monetary Policy Report, the bank said covid-19 is dramatically reducing jobs and incomes in the economy.

The fall in output has been large and consumer spending has declined sharply. But the disruption will be temporary, the bank noted.

As the social distancing measures are lifted, the economy will recover.

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