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MNI BRIEF: BOE Policy Unchanged, Eyeing Brexit Impact On GBP

Sees Boost From Vaccine Later in 2022 After Near-Term Lockdown Hit.


The Bank of England voted unanimously to leave policy unchanged at its December meeting, with Bank Rate at 0.1% and the target asset purchase stock at GBP895 billion the latest Policy statement and minutes published Thursday show. The Bank's Monetary Policy Committee left in place its guidance that tightening would only begin when there was clear evidence that spare capacity was being eliminated and inflation was sustainably returning to the 2% target.

The positive news on the roll out of vaccines against Covid was seen as removing a downside risk but the MPC noted that the renewed imposition of restraints to deal with the second Covid wave would weigh on Q1 activity and that near-term growth could be weaker than it had previously anticipated. The MPC noted the risks from UK-EU trade negotiations but without fresh forecasts it shed little light on the outlook.

The decision was in line with the view outlined in the MNI Preview published on Dec 15.