BoE left Bank Rate unchanged at 0.75% and kept asset purchase target at GBP 435B, on unanimous vote, as widely expected. New economic projections were released with the Quarterly Inflation Report too. One important point to note is that new forecasts are based on slower projected rate path. That is, Bank Rate is projected to rise to 0.9% in 2021 Q2, down from February’s projection of 1.1%. In 2022, Q2, Bank Rate is forecast at 1.0%
On growth, BoE forecast annual GDP growth to be:
- 1.5% in 2019 (revised up from 1.2%);
- 1.6% in 2020 (revised up from 1.5%);
- 2.1% in 2011, (revised up from 1.9%);
On Inflation, BoE forecast CPI to be at:
- 1.6% in Q4 2019 (revised down from 2.0%);
- 2.0% in Q4 2020 (revised down from 2.1%);
- 2.1% in Q4 2021 (unchanged);
Again, BoE reiterated: “The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal, in particular: the new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond. The appropriate path of monetary policy will depend on the balance of these effects on demand, supply and the exchange rate. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.”
