BOE Raises UK Growth Forecast to 7.25% This Year... Keeps Base Rate at 0.1%

Timing of Economic Recovery to Pre-COVID-19 Levels Moved Up from Q1 Next Year to Q4 This Year

▲Exterior view of the Bank of England.

[Asia Economy Reporter Lim Cheol-young] The Bank of England (BOE), the central bank of the United Kingdom, has raised its growth forecast for this year to 7.25%. This is an increase of 2.35 percentage points from the forecast presented in February.

On the 6th (local time), the BOE revised its growth forecast for this year upward to 7.25%, predicting that the economy will recover to pre-COVID-19 levels by the fourth quarter of this year, instead of the first quarter of next year as previously expected. However, the growth forecast for next year was lowered from 7.25% to 5.75% in light of this upward revision.

Additionally, the BOE announced that it unanimously decided to keep the base interest rate at 0.1% during the Monetary Policy Committee regular meeting held on the 5th. The BOE had lowered the base rate from 0.75% to 0.25% in March last year, and shortly thereafter further reduced it from 0.25% to 0.1%, marking the lowest level in history.

While keeping the base rate unchanged, the BOE decided to slow down the pace of bond purchases. Currently, the BOE is purchasing bonds worth ?4.4 billion per week, but plans to reduce this to ?3.4 billion per week until August. Local media such as Sky News forecast that the BOE will not raise the base rate in the near future while adjusting the pace of bond purchases.

The BOE emphasized, "We have set monetary policy to achieve the inflation target of 2% and to support growth and development," adding, "Since the timing of the asset purchase program remains unchanged, this should not be interpreted as a change in the monetary policy stance."