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The Bank of England (BOE) is seen keeping the interest rates unchanged at least until 2021 even though the UK economy is expected to take over two years to return to pre-COVID-19 pandemic levels, the latest Reuters poll of over 70 economists found on Friday.

Key findings

“The economy would contract 1.4% this quarter after shrinking 2.0% in the final three months of 2020.“

“The next quarter the economy was expected to expand by 3.9% and then grow 2.5% the quarter after. For 2021 as a whole growth was pegged at 4.9% and for 2022 it was 5.3%.”

“When asked how long it would take for the economy to recover to its pre-COVID-19 level 14 of 23 respondents to an additional question said it would be at least two years. Nine said within two years and none said within a year.”

“Sixteen respondents said the Bank was unlikely or very unlikely to take borrowing costs into negative territory and eight said it was likely or very likely. In an October poll only five said the Bank would go sub-zero.”

“Only three of 57 economists expected a cut at the Bank’s Feb. 4 meeting and medians in the poll suggested Bank Rate wouldn’t move from its record low of 0.1% until 2024 at the earliest. However, six of the near 60 respondents expected negative rates by the end of 2021.”

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