developing story ….
Key quotes
Initial fall in the UK and global activity was less sharp than BOE feared in May
How the UK economy develops will depend on how pandemic evolves, policy response and response from households and businesses
Sees effective lower bound still at 0.1%
BOE’s central case sees GDP recovering steadily, but there are real uncertainties and risks
If you have negative rates in the toolbox, you are duty bound to explore in more detail the operational considerations
Sees risks from COVID-19, US election, Brexit
He is particularly focused on labor market
We are not about to use negative rates imminently
We will need to factor Sunak’s changes to the UK job support into November forecasts
Engagement with banks on negative rates will take time
Our central case sees unemployment picking up “really sharply” this year
We also have QE programme currently in flight
Clear that risks to growth are to downside
More likely unemployment will peak above 7.5% than below, be slower to fall
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