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Summary
- The Bank of England MPC maintained the key lending rates near zero, at 0.1 per cent
- The Committee has kept the policy stance “appropriate” at its meeting ended on 17 March 2021
The Bank of England (BoE) Monetary Policy Committee (MPC) on Thursday, 18 March, maintained the key lending rates near zero, at 0.1 per cent, for the eighth time in a row. The nine-member Committee led by the BoE Governor Andrew Bailey has once again extended the breather on raising the interest rates.
Bank of England MPC March 2021
The Committee has set the monetary policy to meet the inflation target of 2 per cent, paving the way for sustainable growth and employment. Further, the Committee has kept the policy stance “appropriate” at its meeting ended on 17 March 2021. The nine-member jury has voted “unanimously” to keep the bank rate at 0.1 per cent.
Earlier this month itself, major central banks across the globe have reiterated their policy stance, keeping the respective interest rates near zero in order to aid growth and catalyse the economic recovery from the pandemic bottoms.
Central banks, including the Reserve Bank of Australia, Bank of Canada, European Central Bank and the very-recent outcome of the US Federal Reserve has indicated that the central monetary authorities are seemingly proceeding ahead with caution as Covid-19 worries persist.
BoE MPC March 2021 highlights
- With unanimous voting, the BoE is set to continue the sterling non-financial investment-grade bond purchases at £20 billion.
- Further, the central bank will be continuing the existing programme of UK government bond purchases, maintaining the target of £875 billion. The net target of asset purchases to remain at £895 billion.
- The Committee admitted that the developments around the global GDP growth have been a little stronger than anticipated in the February’s MPC meet.
- According to the BoE, the $1.9 trillion fiscal stimulus package by the Washington administration is likely to provide “significant additional support” to the outlook.
On Covid
- The rate of infections and the subsequent number of hospital admissions have reduced across the United Kingdom with the ongoing vaccination programme, MPC noted.
- It is likely that restrictions could be lifted “somewhat more rapidly” as compared to the forecast provided in the February report, BoE said.
On Budget 2021
- The extension of the job support scheme and other relief measures in Budget 2021 alongside the announcement of significant policies is likely to support the economy in the near term.
On jobs
- The Labour Force Survey (LFS) unemployment rate jumped to 5.1 per cent in the three months to December, MPC noted.
- The near-term rise in the unemployment rate is likely to be moderate as compared to February’s estimates as the government has extended the job support scheme.
On CPI inflation
- BoE’s MPC has predicted that the consumer price index-based inflation is likely to rebound swiftly towards the 2 per cent target in the spring as the expectations remain “well anchored”.
Economic outlook
- As per the recently-concluded meeting, the BoE’s MPC has reiterated its unpredictable notion.
- The relative movement in the demand and supply cycles, as the country progresses ahead on the path of economic recovery from the pandemic, remains “unusually uncertain”, BoE said.
- The “evolution of the pandemic”, the “responses of enterprises, financial markets and the households”, and the “measures taken to safeguard public health” remain the key factors that will continue to steer the economic rebound.
- The Committee stands prepared to incorporate any additional action if the outlook for inflation weakens.
