BoE Chief Economist Andy Haldane told the Daily Mail newspaper that as people’s incomes held up and spending was restrained by the coronavirus restrictions, “they have amassed around £100billion of excess savings.” People are using their “involuntarily-accumulated savings” on a new house or a new car, and there are “plenty of those savings still to be used.”

Households have shown “unbelievable resilience” and consumer spending has “come back at real pace”. People are also flexible as “they are not going to the pubs and restaurants, but they have switched to takeaways and patio heaters.”

Haldane believed that the roll out of the Pfizer/BioNTech COVID-19 vaccine could deliver a boost to the economy. “There is plenty of scope there for the vaccine to release more of that pent-up demand.”

Michael Saunders talked about “Some Monetary Policy Options – If More Support Is Needed” in a speech. He said, “My judgment at present is that the ELB (effective lower bound) for the UK is probably a little below zero, provided appropriate mitigations (eg reserve tiering, bank funding scheme) are in place”. Though, there is “considerable uncertainty over its exact level”, which has several implications.

Firstly, “monetary policy space is still relatively limited. Secondly, “further asset purchases by themselves may be less effective in providing additional stimulus”. Thirdly, “forward guidance can probably only achieve modest extra support”. Fourthly, while there maybe scope to cut Bank Rate further, the approach “should take account of ELB uncertainty”. Fifthly, “complementarities and synergies between policy instruments matter more than usual.”

Full speech here.