LONDON- The Bank of England will say on Thursday that Britain’s economy is heading for a much stronger recovery this year than it previously expected and it might start to slow its pandemic emergency support.
The BoE forecast in February that the world’s fifth-biggest economy would grow by 5 percent in 2021, having slumped by 10 percent in 2020.
That was a bigger hit than in most other European economies after Prime Minister Boris Johnson was slower to impose a coronavirus lockdown and had to keep it in place for longer in an economy heavily reliant on face-to-face consumer services.
But many economists say Britain is now set to grow by more than 7 percent this year, boosted by its fast COVID-19 vaccinations.
The BoE will announce its latest forecasts at 1100 GMT when it is also expected to keep its benchmark interest rate and its bond-buying program unchanged, for now.
“There’s a growing sense that the UK is finally on the way out of the pandemic, and with that comes an increased focus on the Bank of England’s future tightening plans,” analysts at ING said in a note to clients. “Indeed, we think the Bank may announce some tapering of its quantitative easing program.”
The BoE is spending 4.4 billion pounds ($6.12 billion) a week on its bond-buying program, having cut the benchmark rate to an all-time low of 0.1 percent in March last year.
That pace might slow to 3.2 billion pounds a week to allow the quantitative easing program, currently capped at 895 billion-pounds, to last until the end of the year, analysts at Bank of America said.
Such a move would represent a moderate step towards the moment when the BoE begins to reverse its emergency stimulus. – Reuters
