BoE stays ready to act following recent easing measures – UOB

Lee Sue Ann, Economist at UOB Group, reviewed the recently announced stimulus measures by the BoE to tackle the negative impacts of the COVID-19 on the UK economy.

Key Quotes

“Following two off-calendar rate decisions on 11 March and 19 March, the Bank of England (BOE) monetary policy committee (MPC) kept the Bank Rate on hold at 0.10%, an all-time low, and did not announce any new additional measures at its scheduled meeting on Thursday (26 March).”

“In the accompanying Monetary Policy Summary and minutes of the Monetary Policy Committee meeting, the BOE cautioned that “there is little evidence as yet to assess the precise magnitude of the economic shock from COVID-19”, but added that “there is a risk of longer-term damage to the economy, especially if there are business failures on a large scale or significant increases in unemployment”.

“Despite yesterday’s relatively uneventful meeting, the BOE declared that it “stands ready to respond further as necessary to guard against an unwarranted tightening in financial conditions and support the economy.”

“We think the Bank Rate will remain at 0.10% for some time, and the BOE will follow up with additional QE if more needs to be done. Fiscal measures will also increase along the way especially if the COVID-19 pandemic proves to be more protracted and severe.”