The Bank of England voted fully to keep borrowing fees the same
The Bank of England held its main interest rate at 0.1% on Thursday despite central bank warning of inflationary pressures as the UK economy continues to recover.
Susannah Streeter, senior investment and market analyst Hargreaves Lansdown, commented on the bank’s decision.
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“The Bank of England has not yet ripped the party’s rules book, and is pleased that the economy will have an Eastern feast on record rates and ultra-loose monetary policy. If an inflation guest starts acting, the game will be the one that will be We’re ready to change, but now we’re not changing mood music,” Streeter says.
The Monetary Policy Committee held a bright outlook around the UK economy. With restrictions on economic activity eased, the Bank of England revised its second quarter estimate for growth by 1.5%. The central bank expects this month’s production to fall just 2.5% below its fourth quarter 2019 levels just before the start of the pandemic.
“The UK economy has still danced to the harmony of consumer trust, aided by the bouncy castles and jumps in the housing market since the reopening of shops, pubs and restaurants in April. Current economic activity is Even stronger than in May, the supply bottleneck is pushing prices up at a time when demand for products is strong,” Streeter added.
The recovery continues, but inflation is expected to be blown past 3% above the BOE target. But it is expected that they will then retreat, saying, “higher-priced balloons are losing air,” Streeter said.
“There are already signs of party poop. Companies need to cut their services due to lack of staff. The Bank of England has identified currently difficulties in hiring across the sector and regions. And this could be a growth resistance,” Streeter said.
“The Bank of England knows they need to withdraw the sugar rush of cheap money. But for now, the party guests are enough to deal with their treat being taken away. I’ve decided it’s not robust.”
A significant portion of the UK economy, which shrunk by 10% in 2020, is now open, but social distancing requirements are still in force.
