Bank of England keeps rates on hold

AAPAAP
The Bank of England has kept its benchmark interest rate at an all-time low of 0.1 per cent.
Camera IconThe Bank of England has kept its benchmark interest rate at an all-time low of 0.1 per cent. Credit: EPA

The Bank of England says it will slow the pace of its bond-buying as it sharply increased its forecast for Britain's economic growth this year after its coronavirus slump.

The BoE kept its benchmark interest rate at an all-time low of 0.1 per cent and the size of its bond-buying program unchanged at STG895 billion ($A1.61 trillion), as expected by economists polled by Reuters.

But the central bank said it would slow its bond-buying to STG3.4 billion a week between May and August, down from its current pace of STG4.4 billion a week.

"The expected completion point of the purchase program remained unchanged. This operational decision should not be interpreted as a change in the stance of monetary policy," the BoE said.

The central bank raised its forecast for British economic growth in 2021 to 7.25 per cent from its previous forecast of 5.0 per cent made in February, but it lowered its projection for growth in 2022 to 5.75 per cent from its previous estimate of 7.25 per cent.

The BoE also said the economy was set to return to its pre-pandemic size in the last quarter of 2021, earlier than its February projection of the first quarter of 2022.

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