September 18, 2021

The Bank of England considered the risk of inflation

The Bank of England on Thursday updated its monetary policy and forecasts and kept an eye on the inflation outlook as rising prices around the world threaten the economic recovery.

Although, according to economists, the BoE is expected to keep its central interest rate at a record low of 0.1 per cent in the UK, it could explain in detail whether the central bank will implement its emergency cash stimulus program, or quantitative easing (QE). How to reduce

That’s because the UK has lifted most of its lockdown restrictions, which could put pressure on its economy to recover, despite concerns over the rapidly spreading delta version of the corona virus.

At the same time, analysts say the UK government may have kept in mind the expected rise in British unemployment after scrapping its furlough scheme next month, which has put millions of Britons in private sector jobs during epidemics. Has happened

BoE announcements are due at 1100 GMT.

Fawad Razzaqzada, an analyst at Think Markets, said: “The need for emergency stimulus measures is diminishing, but the BoE meeting is unlikely to reduce QE.”

“However, it could prepare the market for a downturn in the coming months. The reason is that inflation is expected to return after well above the bank’s target of 2.0 per cent,” he added.

Boeing Governor Andrew Bailey and other bank policymakers gathered for a regular policy meeting this week as official figures show that annual UK inflation is close to a three-year high.

The Consumer Prices Index surpassed the target of 2.5% in June when the UK lifted the ban on the virus.

Markets around the world are on red alert due to rising inflation – which is due to rising oil and other commodity prices – as it could force policymakers to raise interest rates sooner than expected, leading to recovery. Interruptions may occur.

Bank of England
The Bank of England is expected to keep its key record low interest rates, but it could signal plans to end its coveted stimulus program. Photo: AFP / Nicklaus Hallen

The key function of the BoE is to use monetary policy to keep annual UK inflation close to the target set by the British government at 2.0 to protect the value of the pound.

“While the Bank of England (Thursday) will upgrade its near-term inflation forecast …

The Federal Reserve and the European Central Bank also insist that high inflation will be temporary, which will not change their own extremely low rates and economic aid measures.

Following the outbreak of the epidemic in March 2020, the BoE cut its key interest rates to their current record lows.

It began to accumulate large amounts of new money in the economy.

The bank has raised 50 450 billion (7 627 billion, 9 529 billion) under its QE program since March last year, when Covid 19 signaled the UK’s first corona virus lockdown.

Earlier, it pumped hundreds of billions of pounds worth of QE into the UK economy during the decade following the 2008-09 global financial crisis and Bridget.

The central bank’s total emergency stimulus package is 89 895 billion.

Copyright AFP All rights reserved.

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