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Bank of England slows bond-buying, raises 2021 growth forecast

The BoE kept its benchmark interest rate at an all-time low of 0.1% and the size of its bond-buying programme unchanged at 895 billion pounds ($1.24 trillion).

May 06, 2021 / 06:12 PM IST
Representative Image

Representative Image

The Bank of England said on Thursday it would slow the pace of its bond-buying as it sharply increased its forecast for Britain's economic growth this year after its coronavirus slump.

The BoE kept its benchmark interest rate at an all-time low of 0.1% and the size of its bond-buying programme unchanged at 895 billion pounds ($1.24 trillion), as expected by economists polled by Reuters.

But the central bank said it would slow its bond-buying to 3.4 billion pounds a week between May and August, down from its current pace of 4.4 billion pounds a week.

Experts see another 3-4% downgrade if the virus is not contained imminently

"The expected completion point of the purchase programme remained unchanged. This operational decision should not be interpreted as a change in the stance of monetary policy," the BoE said.

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The central bank raised its forecast for British economic growth in 2021 to 7.25% from its previous forecast of 5.0% made in February, but it lowered its projection for growth in 2022 to 5.75% from its previous estimate of 7.25%.

The BoE also said the economy was set to return to its pre-pandemic size in the last quarter of 2021, earlier than its February projection of the first quarter of 2022.
Reuters

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