- UK’s monetary policy committee votes in favor of keeping rates steady at 0.10%.
- BoE says it is willing to expand asset purchases if the need arises in the upcoming weeks.
- Band of England to maintain its bond-buying program at £645 billion.
- British financial regulators ease reporting rules for companies amidst the Coronavirus pandemic.
UK’s Monetary Policy Committee (MPC) voted in favor of keeping the official bank rate steady at 0.10% on Thursday. The ongoing Coronavirus pandemic that pushed the government into ordering a countrywide lockdown to minimize the fast-transmission of COVID-19 is weighing heavily on the UK’s economy that is forecast to contract sharply this year.
The Bank of England (BoE) said on Thursday that in order to protect the economy against the pandemic, it is willing to expand asset purchases if such a need arises in the upcoming weeks. The move, as per the BoE, will also serve to avoid an unwarranted strictness in the monetary policy.
BoE To Maintain Its Bond-Buying Program At £645 Billion
The BoE’s announcement also highlighted that it plans on maintaining its bond-buying program at £645 billion. The program primarily comprises of corporate bonds and the government’s debt.
In recent weeks, the British Monetary Policy Committee has resorted to two rate cuts of 65 basis points in total from 0.75% to 0.10% to shield the country from the economic impact of the Coronavirus pandemic. The authorities have also uplifted its bond-buying program by a massive £200 billion as a response to the ongoing health emergency.
According to the Bank of England:
“The scale and duration of the shock to economic activity, while highly uncertain, will be large and sharp but should ultimately prove temporary, particularly if job losses and business failures can be minimized.”
UK’s finance minister, Rishi Sunak, also announced an unprecedented £330 billion in loans and guarantees (government-backed) for the Coronavirus hit businesses last week. Smaller business, Sunak added, will be eligible to apply for a £25,000 worth of cash grant to survive through the pandemic.
British Financial Regulators Ease Reporting Rules For Companies
Other measures by the British authorities include financial regulators easing the financial reporting rules for the companies. Businesses will now have an extended deadline to report results while banks will relish greater flexibility in handling difficult loans.
The forex market hasn’t responded aggressively to the MPC’s vote on the official bank rate so far. GBP/USD surged from 1.1935 to 1.20 level. The pair, however, retreated almost immediately back to 1.1960 level where it is currently trading. The overall daily gain for Cable is still sharp on Thursday as the pair was reported trading as low as 1.1820 earlier in the day.