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Economist at UOB Group Lee Sue Ann assesses the latest BoE event.

Key Quotes

“At its first meeting for the year, the Bank of England (BOE)’s monetary policy committee (MPC) judged that the existing stance of monetary policy remains appropriate.”

“The BOE, on Thursday, also updated its forecasts, adding that the UK economy did not suffer as badly at the end of 2020 as previously expected, but there would be a downturn in the first quarter of 2021 because of the long lockdown while vaccinations were rolled out. GDP is now forecast to fall 4.2% in the first three months of the year… But the economy is still predicted to return to its pre-pandemic size in early 2022, with consumers expected to spend heavily once the pandemic restrictions were lifted.”

“There is certainly somewhat less pressure for the BOE to offer furtther stimulus given the rapid vaccine rollout and the corresponding likelihood of a recovery beyond Spring. That said, the outlook for the UK remains incredibly uncertain with downside risks. At this juncture, we are not ruling out an acceleration in the pace of bond purchases, or changes to the Term Funding Scheme. As for negative interest rates, we are not expecting any further cuts for now, though policymakers will be careful not to shut the door to this option.”