By Paul Hannon
The Bank of England raised its 2021 growth forecasts for the U.K. economy on Thursday, but left its key interest rate unchanged and gave no indication that it was planning to change its policy settings soon.
At its latest policy meeting, the central bank left its key interest rate at 0.1% and its program of government bond purchases at 875 billion pounds ($1.217 trillion).
In a statement, its Monetary Policy Committee said that the U.K.'s growth prospects had improved since it last released forecasts in February, citing the rapid pace of vaccinations and the fact that activity had proved more resilient than expected under restrictions that the government hopes to lift by the end of June.
"New Covid cases in the United Kingdom have continued to fall, the vaccination program is proceeding apace, and restrictions on economic activity are easing," the central bank said.
The BOE said it now expects the U.K. economy to grow by 7.25% in 2021, having previously forecast growth of 5%. However, it lowered its 2022 growth forecast to 5.75% from 7.25%.
It also said that it expects the inflation rate to be just below its target of 2% in the second quarter of 2024 if it were to raise its key interest rate by the second quarter of 2023, and a second time by the second quarter of 2024. That is a way of signaling that the central bank is in no rush to tighten policy soon.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
05-06-21 0738ET
