BoE pumps extra £150bn into UK economy

An additional £150bn is being pumped into the UK economy by the Bank of England (BoE) as the country enters a second lockdown

The Monetary Policy Committee (MPC) at the BoE also voted unanimously to maintain the Bank’s base rate at 0.1%.

The Bank revealed that its MPC has agreed to increase its target stock of purchased UK government bonds by an additional £150bn in order to meet its inflation target in the medium- term, which now takes the total stock of government bond purchases to £875bn.

Household spending and GDP are expected to pick up in the first quarter of 2021 as coronavirus restrictions across the country loosen. The Bank stated that GDP is projected to “recover further” as the direct impact of COVID-19 on the economy is “assumed to wane”.

Commenting on the move from the BoE, AJ Bell financial analyst, Laith Khalaf, said: “The Bank is beginning to run out of dry powder as it now holds almost half the gilt market, and interest rates are already close to zero.

“That means if the central bank wants to boost the economy further, it may resort to even more extraordinary measures than we have today. Negative interest rates are certainly on the table.
 
“Much will depend on how the pandemic, social restrictions and the government’s fiscal response proceed from here. For the moment, markets are pricing in a 40% chance of an interest rate cut next year, and it’s fair to say that markets have consistently underestimated the capacity for monetary policy to loosen ever since the financial crisis.
  
“The BoE is now forecasting an 11% drop in GDP in the last three months of this year. It then projects growth through next year, reaching pre-COVID levels by the end of the year, on the premise that social restrictions loosen and the pandemic’s impact on the economy begins to wane. Let’s hope they’re right, even though that looks like a heroic assumption right now.”

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Helping the credit challenged get mortgage ready
A rising number of borrowers are finding it harder to access mortgages due to being credit challenged - whether that’s from historic debts, a county court judgment, or having little to no credit history.

In the latest episode of the Mortgage Insider podcast, Phil Spencer is joined by Eloise Hall, Head of National Accounts at Kensington Mortgages, and Alastair Douglas, CEO of TotallyMoney.


Inside the world of high net worth lending
The mortgage market continues to evolve, and so too does the answer to the question: what is a high net worth individual in today’s market? In this episode of the Mortgage Insider podcast, host Phil Spencer is joined by Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank, and Islay Robinson, founder and CEO of Enness Global. Together, they explore what brokers really need to know when supporting high net worth individuals.

The future of the bridging industry and the Autumn Budget
MoneyAge content editor, Dan McGrath, is joined by head of marketing at Black & White Bridging, Matt Horton, to discuss the bridging industry, the impact of the Autumn Budget and what the future holds for the sector.