Bank of England keeps interest rate at 0.1% as vaccines help economic recovery Business News

The Bank of England kept its interest rate at 0.1 percent and decided not to add to its £ 895million quantitative easing plan.

Its Monetary Policy Committee (MPC) voted to maintain the institution’s previous course and said the rollout of the coronavirus vaccine in the country is helping the economy recover.

The Bank’s 2% inflation target would likely be met this year, he said. Currently the figure is 0.7%.

In its report, the MPC said the estimated 1.5% drop in gross domestic product (GDP) in the first quarter was less severe than expected and that the measure of economic output was likely to increase “sharply” in the second. quarter of about 4.25%. .

He also lowered his unemployment forecast for the year.

During 2021, a rebound of 7.25% is expected, higher than previously thought. However, growth of 5.75 is now forecast in 2022, instead of the 7.25% previously forecast.

The MPC report said: “GDP is expected to recover strongly to pre-Covid levels for the remainder of this year in the absence of most restrictions on domestic economic activity.

“Demand growth is further stimulated by lower health risks and lower uncertainty, as well as announced fiscal and monetary stimulus measures.

“Consumer spending is also supported by households reducing over the next three years around 10% of their accumulated additional savings.

“After 2021, the pace of GDP growth is expected to slow as the surge in some of these factors abates. The level of activity is higher in each quarter of the forecast than in the February projections. “

The MPC said its predictions were based on easing restrictions on coronaviruses in line with plans set out by Westminster and devolved governments. A potential resurgence of the virus and the threat of new strains could negatively affect the economy, he warned.

The coronavirus pandemic precipitated the UK’s biggest drop in production for 300 years in 2020, when it fell 9.8%.