Bank of England expands government bond buyback program to £ 875bn

Today a meeting of the Bank of England was held, following which the regulator kept the base interest rate at 0.1%. It was also decided to increase the volume of the government bond buyback program from 745 billion pounds to 875 billion pounds.

This decision was supported by all members of the Monetary Policy Committee (MPC). At the same time, the increase in the volume of purchases turned out to be even higher than the forecasts of analysts, who had expected its growth to 825 billion pounds.

The Bank of England also released an updated quarterly forecast, according to which the UK economy by the end of the year will fall by 11%, rather than 9.5%, as suggested by the August forecast. The regulator stressed that the development of the situation with the coronavirus in the country will affect spending in the short term more than predicted.

Household spending and GDP will start to grow in the first quarter of 2021 amid easing quarantine measures, the Bank of England predicts. At the same time, in January-March of next year, economic activity will be significantly lower compared to the fourth quarter of 2019. Also, the Central Bank expects British GDP growth in 2021 by 7.25% instead of 9% and by 6.25% in 2022 instead of 3.5%.