The Bank of England decided to keep key interest rates at a record low of 0.1% on Thursday as it paints a positive short-term economic outlook.
- The Monetary Policy Committee stated that the reduced impact of COVID-19 would boost demand growth and bring the UK economy back to pre-pandemic levels by the end of 2021.
- BoE also maintained the bank’s monetary stimulus package at current levels but reduced the level of asset purchases from £875 billion to £830 billion.
- The bank also posted its unchanged quarterly economic forecast that the UK economy would rebound by 7.25% but raised its forecast for 2020 from 5.75% to 6%.
- The Commission warned of a “more prominent period” of inflation above target in the short-term than expected in May as they expected cost pressures to be a temporary issue.
The UK’s inflation rate stands at 2.5% due to the soaring energy prices, and the bank expects inflation to increase to 4% in 2021.
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Source: Bank of England.