The Bank of England has upgraded its growth forecast for the coronavirus-hit UK economy and signalled it will not raise interest rates in the near term – despite seeing a looming spike in inflation ahead.
The latest meeting of the central bank’s interest rate-setting committee left policy unchanged, with rates remaining at their COVID-19 crisis low of 0.1% as analysts had widely expected.
Its £895bn programme of asset purchases, known as quantitative easing, was also kept static.
But its quarterly Monetary Policy Report said that the vaccine-led recovery from the sharpest hit to the economy in over 300 years in 2020 was clearly under way at a greater speed than initially expected.
The Bank said it now saw growth of 7.25% during 2021, which would be the strongest since 1941.