Bank of England keeps interest rates unchanged at record low of 0.1% as economy shows signs of recovery from pandemic slump
The Bank of England today kept interest rates at a record-low 0.1 per cent as its economists grew more optimistic about the UK’s post-pandemic recovery.
The unanimous and widely anticipated decision by the Monetary Policy Committee means the rates will remain at the lowest level in the Bank’s 327-year history.
The Bank’s rate-setting panel said growth is likely to be greater than it previously thought in the coming months largely due to the rapid rollout of Covid-19 vaccines.
They added that the easing of lockdown rules in England should spur consumer spending, after non-essential shops and outdoor hospitality reopened on April 12.
The Bank of England today kept interest rates at a record-low 0.1 per cent (file picture)
The next stages are May 17 when indoor hospitality will return along with socially-distanced outdoor and indoor events, before it is hoped all rules cease on June 21.
The Bank has projected that UK gross domestic product (GDP) will rebound by 7.25 per cent in 2021, which is a sharper recovery than its previous forecasts.
Previously, 5 per cent growth was predicted. In addition the Bank said it now expects 5.75 per cent growth in 2022, instead of the 7.25 per cent previously predicted.
Bank officials also did not change the size of their bond-buying stimulus programme at £895billion amid growing hopes for a recovery helped by the fast vaccine rollout.
Consumers and businesses who stocked up on cash saved during the pandemic will also point to a much stronger recovery this year than had been previously hoped.
Britain’s successful vaccine rollout has allowed the UK economy to reopen faster than many had expected. Sterling hovered around the $1.39 mark today.