United Kingdom Interest Rate1971-2020 Data | 2021-2022 Forecast | Calendar

The Bank of England voted unanimously to maintain Bank Rate at a record low of 0.1% and the size of its bond-buying program at ￡875 billion during its December meeting, as policymakers took a wait-and-see approach amid uncertainty surrounding a post-Brexit trade deal and concerns over the coronavirus situation. Still, the central bank noted that the successful trialing of some Covid vaccines and initial plans to roll them out widely over the first half of next year will likely reduce the downside risks to the economic outlook. Looking ahead, officials pledged to take whatever additional action is necessary to achieve the 2% inflation target, in a way that helps to sustain growth and employment. CPI inflation is expected to rise quite sharply towards the target in the spring, as the VAT cut comes to an end and the large fall in energy prices earlier this year drops out of the annual comparison.

The Bank of England is seen taking a wait-and-see approach during its last monetary policy meeting of 2020 as it is still uncertain if there would be a post-Brexit trade agreement. Policymakers are expected to leave the benchmark interest rate at a record low of 0.1% and the bond-buying programme at ￡875 billion, after extending it by a larger-than-expected ￡150 billion in November. Still, investors will be looking for more guidance on this additional stimulus and any clues over how to implement negative interest rates as the key bank rate is likely to be cut to -0.1% next year.

The Bank of England left its Bank Rate at a record low of 0.1% on November 5th 2020 and increased the size of its bond-buying program by a larger-than-expected ￡150 billion to ￡875 billion, as the country entered a new coronavirus lockdown. Policymakers noted that there has been a rapid rise in rates of Covid infection and the UK Government has responded by increasing the severity of Covid restrictions. Also, consumer spending has softened across a range of high-frequency indicators, while investment intentions have remained weak. The central bank sees the economy shrinking by 11% in Q4 2020, much worse than a 5.4% drop projected in August and to grow by a stronger 11% in Q4 2021. Inflation is expected higher at 0.6% in Q4 2020 (vs 0.3% in August) and the unemployment rate is seen lower at 6.3% (vs 7.5%). The key bank rate is expected to remain steady at 0.1% through the rest of 2020 but is likely to be cut to -0.1% next year.

The Bank of England voted unanimously to maintain Bank Rate at a record low of 0.1% and the size of its bond-buying program at ￡745 billion during its September meeting. Policymakers noted that domestic economic data have been a little stronger than expected in August, while the outlook for the economy remains unusually uncertain due to the coronavirus pandemic and recent Brexit developments, leaving the door open to negative interest rates and more QE. CPI inflation is expected to remain below 1% until early 2021 and unemployment will probably remain elevated for some time. The central bank also said it does not intend to tighten monetary policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.