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British central bank leaves key interest rate close to zero

by drbyos
Bank of England

The British central bank leaves its key interest rate close to zero.

(Photo: Bloomberg)

London In the virus crisis, the Bank of England leaves the key interest rate close to zero and at the same time leaves the door open for further emergency measures. Custodians around central bank chief Andrew Bailey did not touch the key monetary policy rate of 0.1 percent on Thursday, which they recently lowered out of line as part of a crisis package to this record low.

They now signaled that they could expand their securities purchases to support the economy if necessary. As part of the crisis package, bond purchases have already been increased by £ 200 billion to £ 645 billion.

In the meantime, the virus crisis has brought the British economy to a standstill in many areas. The Bank of England (BoE) therefore believes that an economic downturn is likely.

The consequences of the virus crisis, according to the monetary authorities, pose the risk that the economy could suffer long-term damage. It also fits that the industry on the island is more pessimistic about the economy than it has been since the financial crisis over a decade ago.

The BoE also assumes that the inflation rate will drop below the 1.0 percent mark in the wake of the corona crisis and against the backdrop of the recent fall in oil prices in the spring. It was recently 1.7 percent and thus already well below the BoE target, which is aiming for a value of 2.0 percent as ideal for the economy.

More: Will inflation come with the giant bailout packages?

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