Market news

6 May 2021

Bank of England to say UK recovery is accelerating

Reuters reports that 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% in 2021, having slumped by 10% in 2020.

But many economists say Britain is now set to grow by more than 7% 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 programme 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 programme."

The BoE is spending 4.4 billion pounds ($6.12 billion) a week on its bond-buying programme, having cut the benchmark rate to an all-time low of 0.1% in March last year.

That pace might slow to 3.2 billion pounds a week to allow the quantitative easing programme, currently capped at 895 billion-pounds, to last until the end of the year, analysts at Bank of America said.

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