Sunday, July 25, 2021
HomeLive StreamBank of England keeps rates unchanged as consumer spending outlook boosted

Bank of England keeps rates unchanged as consumer spending outlook boosted

[ad_1]

The Bank of England has kept interest rates on hold as it said the rapid rollout of the vaccination programme and road map for easing restrictions would help drive an economic rebound this year.

The Bank said the Prime Minister’s plans would see England brought out of lockdown faster than it expected, helping to deliver a “slightly stronger” rise in consumer spending than it previously predicted.

But minutes of the latest rates decision showed the outlook for the economy remained “unusually uncertain”, adding it was unclear how the spending boost would impact its forecasts for growth.

The rates decision comes amid growing concerns of an inflation surge at the end of the year, driven by the economic bounce-back, which has seen financial markets pencil in rate rises in 2022.

The committee 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% inflation target sustainably

The Bank said consumer prices index (CPI) inflation – currently at 0.7% – is set to quickly return to around 2% in the spring, due in part to recent increases in energy prices.

It added: “The MPC will continue to monitor the situation closely. If the outlook for inflation weakens, the committee stands ready to take whatever additional action is necessary to achieve its remit.

“The committee 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% inflation target sustainably.”

The Bank forecast in February that the economy would start bouncing back strongly from the start of the summer, helped by the progress of the coronavirus vaccination programme.

It said in the latest minutes of the Monetary Policy Committee (MPC) meeting that since then, “rates of Covid infections and hospitalisations had fallen markedly across the United Kingdom and the vaccination programme was proceeding at a rapid pace”.

The Bank added: “Plans for the easing of restrictions on activity had been announced and envisaged that restrictions could be lifted somewhat more rapidly than had been assumed in the February report.”

[ad_2]

Source link

RELATED ARTICLES
- Advertisment -

Most Popular

Recent Comments

%d bloggers like this: