PANDEMIC POUNDS: Bank of England Expands Bond Buying Program Joining Western Peers
Posted on 11/05/2020
Being prepared for economic damage by a second round of COVID-19 lockdowns, the Bank of England expanded its massive bond buying program by £150 billion. The bond buying program at the Bank of England is now at £895 billion (US$ 1.173 trillion). The Bank of England sees the acceleration of the asset purchase program as a financial bazooka of buying government bonds through the end of 2021. The central bank expected the COVID-19 recovery to be completed by the end of next year.
The Bank of England kept its benchmark Bank Rate at 0.1%.
The central bank expects the U.K. gross domestic product to likely to grow by 7.25% in 2021, weaker than a previous forecast of 9%. The U.K. economy grew 2.1% in August 2020, according to figures released last month by the Office for National Statistics. The U.K. felt the pain of an unprecedented 19.8% contraction in the second quarter of 2020 during the height of the country’s COVID-19 lockdowns. The central bank is expecting unemployment to peak at 7.75% in the second quarter of 2021.