Rolling coverage of the latest economic and financial news
- Latest: BoE leaves interest rates at record lows
- Bank: Restrictions could rise faster than thought
- Economic outlook improving, but range of views about the outlook
Earlier:
- UK online job adverts at one-year high
- US Treasury yields hit 1.7% as bond selloff continues.
- Last night: Federal Reserve lifted growth forecasts but played down tapering worries
Although the Bank of England’s MPC voted 9-0 to leave interest rates and QE unchanged, the committee have a range of views about the economic outlook.
The minutes point out that there are signs of recovery in the economy:
Since the MPC’s previous meeting, the news on near-term economic activity had been positive, although the extent to which that news changed the medium-term outlook was less clear.
On the upside, for example, receding fears of infection, further progress in the vaccination programme, the extension of government support schemes, and less voluntary social distancing could allow households to resume more normal spending behaviour and start to run down a greater proportion of their accumulated savings than had previously been anticipated, boosting jobs and investment.
On the downside, households and businesses could continue to exercise caution in their consumption and investment decisions, while delays in vaccination programmes globally or the emergence of vaccine-resistant variants of the virus could trigger a renewed rise in infections and further periods of restrictions on economic activity in the future
The decision to extend the UK’s furlough scheme until the end of September means UK unemployment will probably rise less than previously feared, the Bank says:
The minutes of this month’s meeting explain:
The LFS unemployment rate had risen to 5.1% in the three months to December, but it was likely that labour market slack had remained higher than implied by this measure.
The extension of the Government’s employment support schemes, beyond the point at which most restrictions on activity might be lifted, was likely to mean that the near-term rise in the LFS unemployment rate would be more moderate than had been suggested by the MPC’s February Report projections, which had been constructed on the basis of existing government policy at that time.