Rates, QE Unchanged, Growth Risk To Downside

• Bank Rate unch at 0.1%, QE stock unch at combined GBP 745bn; decision unanimous
• BOE sees outlook for UK unusually uncertain
• Domestic economic data little stronger than Committee expected at time of Aug report
• Increases in Covid-19 cases likely to weigh on activity
• BOE sees risk of elevated unemployment remains

The BOE voted unanimously to leave the Bank Rate and the amount of QE unchanged in the Sep meeting. The MPC noted that the outlook remains unusually uncertain. While consumption is better than anticipated in the Aug report, investment intentions remain weak. The BOE expects GDP around 7% below its 2019 Q4 level, less weak than projected in the Aug report. The MPC states that growth will depend on the development of the pandemic as well as the new trading arrangements with the EU. Sep's meeting minutes noted that domestic data came in slightly stronger than expected by the Committee in the Aug report, nevertheless it is unclear how informative they are considering the given risks. In line with the Aug report, a risk of higher unemployment than projected remains. The MPC noted that it will review a range of actions which could be taken. It further states that it "does not intend to tighten monetary policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably".