Leaves Rates, QE Unchanged, Growth Risk To Downside

Bank Rate unchanged at 0.1%, QE stock unchanged at combined GBP 745bn; decision unanimous

BOE sees outlook for UK unusually uncertain; projections are less informative

BOE sees GDP below level of Q4 2019 until the end of 2021; GDP outlook skewed to the downside

BOE sees inflation at target in two year's time

The BOE voted unanimously to leave the Bank Rate and the amount of QE unchanged. The MPC noted that the outlook for the UK economy remains unusually uncertain due to the pandemic, which results in less reliable projections. Even though activity has strengthened in recent months, GDP is not forecast to exceed Q4's level of 2019 before the end of 2021, due to weaker supply capacity. The outlook for GDP is skewed to the downside. Unemployment is seen rising to 7.5% by the end of 2020 as the gov. support schemes gradually unwind. Inflation is projected to fall further to around 0.25% in 2020 due to the impact of energy prices and temporary VAT cuts. CPI is forecast to reach the target of 2% in two year's time. The MPC will keep a range of actions under review (incl potential negative rates still being studied). They don't intend to tighten mon. pol. until progress is made to eliminate spare capacity and the CPI target is reached.