Interest rate unchanged despite unusual early announcement

The Bank of England’s monthly interest rate decision was made today – but instead of it being announced at 12 noon, as usual, it happened at 7am.

This was because it wanted to release its decision – which kept base rate at 0.1 per cent – ahead of yet another statement on the economy from Chancellor Rishi Sunak, which is to be made in the House of Commons early this afternoon.

This morning’s ‘steady as she goes’ decision confounded some analysts, who anticipated the BoE may introduce a negative interest rate; when the BoE pulled forward its announcement by five hours, it was thought the decision would be more dramatic.

However, this morning’s statement from the BoE Monetary Policy Committee has made clear that in the light of the “rapid rise in rates of Covid infection” there are likely to be significant restrictions on spending in the next six to nine months, leading to a decline in Gross Domestic Product figures.

Unemployment is expected to peak at 7.5 per cent by the middle of 2021.

The Bank has also announced that it will pump another £150 billion of quantitative easing into the economy in the next six months.

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