Breaking: BoE leaves policy rate and QE unchanged as expected

The Bank of England's (BoE) Monetary Policy Committee (MPC) decided to leave the benchmark interest rate unchanged at 0.10% at its March policy meeting and kept the Asset Purchase Facility steady at £895 billion as widely expected.

Follow our live coverage of the BoE policy announcements and the market reaction.

Market reaction

The GBP/USD pair edged modestly lower with the initial reaction and was last seen losing 0.12% on the day at 1.3950.

Key takeaways from policy statement as summarized by Reuters

"UK GDP fell by 2.9% in January."

"This was less weak than expected, due mainly to developments in public sector output."

"The news in recent plans for the easing of restrictions on activity may be consistent with a slightly stronger outlook for consumption growth."

"The bank intends to purchase evenly across the three gilt maturity sectors."

"Committee continued to envisage that the pace of purchases could remain at around its current level initially, with the flexibility to slow the pace of purchases later."

"Should market functioning worsen materially, the Bank of England stood ready to increase the pace of purchases to ensure the effective transmission of monetary policy."

"In the coming months, the Bank of England would provide more information about its proposed approach to adjusting the corporate bond purchase scheme to account for the climate impact of the issuers of the bonds it held."

"If the outlook for inflation weakened, the committee stood ready to take whatever additional action was necessary to achieve its remit."

"The MPC did not intend to tighten monetary policy at least until there was clear evidence that significant progress was being made in eliminating spare capacity and achieving the 2% inflation target sustainably."

"Risk management considerations had implied that policy should lean strongly against downside risks to the outlook."

"All members of the committee judged that the existing stance of monetary policy remained appropriate."

"Since the MPC’s previous meeting, the news on near-term economic activity had been positive, although the extent to which that news changed the medium-term outlook was less clear."

"Different MPC members placed different weights on the balance of risks around the outlook."

"Outlook for inflation would depend critically on the path of supply."

"Many of the adverse effects on potential output from the pandemic were likely to be temporary, with the same factors that would raise output in coming quarters also being likely to lift supply."

"There was a range of views across MPC members on the degree of spare capacity in the economy currently."

"There was judged to be a material degree of spare capacity at present."

"Outlook for the economy, and particularly the relative movement in demand and supply during the recovery from the pandemic, remained unusually uncertain."

"Aggregate measure of UK financial conditions had been broadly unchanged since the February report."

"Advanced economy longer-term government bond yields had risen rapidly to levels similar to those that had been seen shortly before the pandemic, for the most part this had reflected higher real yields."

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