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Bank of England ups stimulus again

Thursday, November 05, 2020

A quickly rescheduled Bank of England (BoE) meeting on the morning of 5 November, to front run an expected announcement of additional help to households and businesses from Chancellor Rishi Sunak at midday, saw an increase in total quantitative easing government bond purchases of an extra GBP 150 billion to GBP 895 billion, but importantly no move on interest rates into negative territory. The increase in bond purchases won’t start until January, after the UK has officially left the European Union and there was tacit acknowledgment that the rupture will affect UK GDP to the downside. The BoE also acknowledged that the current lockdown, starting on 5 November, will help push the economy into contraction in the fourth quarter by around 2%, to give an overall yearly contraction in 2020 of 11%.

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