The Bank of England on Thursday kept interest rates constant and maintained its existing level of asset buying, as investors see signs that it is anticipating a slower economic recovery.
The key lending rate was maintained at 0.1%, with the central bank halving rates by 0.75% since the onset of the coronavirus pandemic.
The Monetary Policy Committee voted unanimously against extending its bond-buying program, after announcing an additional £ 100bn ($ 131.4bn) expansion in June that took the total value of the bond. Asset Purchase Facility for £ 745 billion.
The central bank will instead wait to see the range of expected rise in unemployment in the autumn. In October, the UK is due to end its fresh scheme, which partially subsidized wages for millions of forced laborers during the pandemic.
Economists have suggested that many of these workers are unlikely to be re-absorbed into the labor market. In its report on Thursday, the BOE said the unemployment rate was projected to rise to around 7.5% by the end of 2020.
The central bank also said the UK̵7;s economic recovery “depends critically on the evolution of the pandemic, the measures taken to protect public health, and how governments, households and businesses respond to these factors. “
He reiterated that he will continue to monitor the situation and is ready to adjust monetary policy accordingly.
Like many of Europe’s major economies, the British government has been forced to reintroduce some restrictions on travel and social activity in recent weeks amid fears of a second wave in cases of koronavirus, while a new lock located in the Scottish city of Aberdeen has been announced.
Along with the pandemic, the UK is also embarking on tense discussions with EU leaders in order to shape a new trade relationship. If talks fail, the UK faces a sudden exit from its transitional period without a trade deal at the end of the year, a scenario that is generally expected to compound the economic damage caused by the pandemic. The next round of talks will start on 17 August.