The Bank of England (BOE) has announced its decision to keep the interest rate at 0.1%, after the Monetary Policy Committee (MPC) unanimously voted to maintain the record low level.
The committee also voted to maintain the stock of sterling non-financial “investment-grade corporate bond” purchases, financed by the issuance of central bank reserves, at £20bn.
Additionally the committee voted unanimously for the BOE to continue with its existing programme of UK government bond purchases, financed by the issuance of central bank reserves and government bond purchases at £875bn.
In January, UK GDP fell by 2.9% which MPC revealed was “less weak than expected”, due mainly to developments in public sector output, however it still left GDP around 10% “below its 2019 Q4 level”.
Following on from the monetary policy report, the committee has predicted a further increase in unemployment over the next couple of quarters.
The committee claimed it does not intend to tighten monetary policy until there is “clear evidence” that significant progress is being made in “eliminating spare capacity” and achieving the 2% inflation target sustainably.
The MPC said it will continue to “monitor the situation closely” and that if the outlook for inflation weakens, “the committee stands ready to take whatever additional action is necessary to achieve its remit”.