COVID-19: Bank of England expands crisis QE programme to £300bn

sky news africa Coronavirus: Bank of England expands crisis QE programme to £300bn

UNITED KINGDOM

The Bank of England has expanded its coronavirus crisis quantitative easing (QE) programme of bond-buying by £100bn – taking the total since March to £300bn.

The move – designed to oil the wheels of financial markets and maintain low borrowing costs – was announced following the latest meeting of the Bank’s rate-setting committee, which maintained interest rates at their record low of 0.1%.

There had been speculation, which died away in recent days, that it could have opted for negative rates as a further tool to bolster activity in an economy currently enduring, what is widely tipped to be, the worst recession in living memory following a record collapse in output during April.

There had been speculation, which died away in recent days, that it could have opted for negative rates as a further tool to bolster activity in an economy currently enduring, what is widely tipped to be, the worst recession in living memory following a record collapse in output during April.

Andrew Bailey thinks the economy could recover quite quickly
Andrew Bailey succeeded Mark Carney as governor in mid-March

The minutes of the meeting showed one member of the monetary policy committee (MPC), chief economist Andy Haldane, voted against the extension of the QE target.

They also highlighted downside risks of a deeper crisis for jobs through higher and more persistent unemployment as employment figures suggest job losses are on course to accelerate as the year progresses and government support for furloughed workers’ wages is scaled down.

But the minutes showed too that the Bank’s earlier expectations on the extent of the economic shock during the second quarter had been overplayed – chiming with recent remarks by its governor Andrew Bailey.

Referring to the GDP figures for April, the statement said: “Evidence from more timely indicators suggests that GDP started to recover thereafter.”

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