The Bank of England’s Monetary Policy Committee voted to hold interest rates and its level of quantitative easing unchanged while the economic outlook remains “highly uncertain.”
The central bank’s report Thursday said the economy might decline by around 25 percent between March and May, according to a number of “stylized assumptions” on the impact of the coronavirus. Over the whole year, it sees output falling by 14 percent, with households holding back on spending even after lockdown measures are reduced and supply capacity in the economy impaired for the long term.
“We are now approaching what appears to be the start of the next phase,” Governor Andrew Bailey said in prepared remarks. “The MPC will continue to monitor the situation closely and, consistent with its remit, stands ready to take further action as necessary to support the economy.”
The committee’s action in its meeting on Wednesday maintains the official bank rate at 0.1 percent and its bond-buying program at £200 billion. Two members of nine on the panel favored an additional £100 billion of bond purchases.
The regulators also conducted a “desktop” stress test on banks in the current crisis and found that credit losses would amount to £80 billion — below the £120 billion of the previous stress test and within current capital buffers.