Bank of England to keep policy on hold due to gloomy economic forecast

in #bankofengland4 years ago

The Bank of England will announce next week how quickly it expects the economy to recover from the coronavirus pandemic, but it is unlikely to add to the 100 billion pounds of the fiscal package it released in June.

Britain s economy contracted by nearly a quarter between February and May with some economists predicting that it could take years before it fully recovers.

In May, the BoE stated that the economy will return to its previous level in the second half of 2021, but policymakers said that recovery could be delayed.

Several economists predicted the central bank to keep its Bank Rate at a record low of 0.1% in 2020 and 2021, but that policymakers will release 70 billion pounds of asset purchases at the end of the year.

Early signs of recovery were promising, with retail sales returning to its pre-pandemic levels and Purchasing Managers  Index data showing its quickest growth since 2015.

However, some BoE policymakers warned that the economy could stall if the recovery in consumer demand fails to push through and households remain cautious of coronavirus dangers.

Unemployment is expected to surge in November following the end of the government s furlough scheme that backed millions of jobs.

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