Future of economy “unusually uncertain”, warns Bank of England

The future of the UK's economy is “unusually uncertain”, the Bank of England has said, as it held interest rates at record lows.

It said new coronavirus vaccines boded well for long-term growth, but that a recent jump in cases would drag on the recovery of the economy.

Uncertainty over the future UK-EU trading relationship also clouded the outlook, it added.

The central bank held rates 0.1% and left its stimulus programme unchanged.

At 0.3% in November, inflation remains a long way below the central bank's 2% target.

However, it said it was ready to accept inflation above 2% if a no-deal Brexit caused sterling to fall sharply, pushing up prices of imports.

The Bank also said it planned to keep the pace of its purchases of British government bonds broadly unchanged in early 2021 as it tries to shore up the economy. But it said it was ready to increase them again if the outlook soured.

Posted on Dec 17, 2020.

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