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The Bank of England holds interest rates at record lows

On the back of recent central bank action across the world, the Bank of England followed the narrative of holding interest rates at record lows of 0.1% and continuation of its asset purchase plan at GBP 875 billion.

07 May 2021

On the back of recent central bank action across the world, the Bank of England followed the narrative of holding interest rates at record lows of 0.1% and continuation of its asset purchase plan at GBP 875 billion. There was one dissenter in the ranks, with Andy Haldane voting for a tapering of the purchases by GBP 50 billion. He does leave the committee after the next meeting so it may be a last sole voice but it could hint to a shifting view that could be potentially be building within the committee that the recovery we are now firmly in, warrants perhaps less stimulation. They raised the UK growth forecast for this year to 7.25% versus 5% previously, so a big upgrade and reflective of the bounce in real recent data and this means the economy returns to pre-pandemic levels over this year. They still view inflation as only being transiently higher, now a common central bank mantra, but either way the growth outlook following the rapid vaccination rollout is continuing to quickly grow and we believe this will only build inflationary pressures over the longer term.

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Charles Hepworth

Investment Director
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