The Bank of England's (BoE) Monetary Policy Committee (MPC) decided to leave the benchmark interest rate unchanged at 0.10% at its May 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.
The British pound came under strong selling pressure with the initial market reaction and the GBP/USD pair slumped to a daily low of 1.3857. As of writing, the pair was down 0.15% on a daily basis at 1.3885.
Key takeaways from policy statement as summarized by Reuters
"Pace of gilt purchases can now be slowed."
"This operational decision should not be interpreted as a change in the stance of monetary policy."
"As measured by the target stock of purchased assets, that stance remained unchanged."
"Should market functioning worsen materially, the BoE stood ready to increase the pace of purchases."
"Committee 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."
"Improved economic outlook warranted a reduction in the degree of additional stimulus being provided to the UK economy."
"UK GDP is expected to have fallen by around 1.5% in 2021 Q1."
"GDP is expected to rise sharply in 2021 Q2."
"Activity in Q2 is likely to remain on average around 5% below its level in 2019 Q4."
"GDP is expected to recover strongly to pre-covid levels over the remainder of this year in the absence of most restrictions on domestic economic activity."
"Demand growth is further boosted by a decline in health risks and a fall in uncertainty."
"Consumer spending is also supported by households running down over the next three years around 10% of their additional accumulated savings."
"After 2021, the pace of gdp growth is expected to slow as the boost from some of those factors wanes."
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