A view over the City of London looking at the Bank of England, right, from the 59th floor of 22 Bishopsgate in London, Thursday, April 1, 2021. When the pandemic struck, about 540,000 workers vanished from London’s financial hub almost overnight. The area known as “the City” became a ghost town as many people began working from home. A year on, most haven’t returned to the business hub. While many people believe that post-pandemic workflow will become the new normal, skyscrapers are still rising, and city planners say they aren’t worried about empty office blocks. (AP Photo/Alastair Grant)
LONDON (AP) — The Bank of England will keep interest rates on hold and has grown more optimistic about the economic recovery in the U.K. this year as a result of the rapid rollout of coronavirus vaccines.
In a prepared statement Thursday, the nine-member Monetary Policy Committee said it will maintain the bank’s main interest rate at 0.1%. The unanimous and widely anticipated decision means that interest rates will remain at the lowest level in the bank’s 327-year history.
Alongside its decision, the bank’s rate-setting panel said growth is likely to be greater than it previously thought in the coming quarters largely due to the rapid rollout of COVID-19 vaccines, and that the easing of lockdown restrictions should spur consumer spending.
“A fast and effective vaccine rollout meant that many individuals might feel safe to return to pre-COVID spending behaviour, supplemented by considerable pent-up demand from the earlier periods of restrictions,” the committee said, according to minutes of their meeting.
In updated forecasts accompanying the rate decision, the bank is now projecting U.K. economic growth of 7.25% in 2021, up from its previous forecast of 5%. Because it anticipates growth being brought forward, it has revised down its forecasts for next year. It is now expects 5.75% growth in 2022, instead of the 7.25% previously predicted.
Source: Associated Press