BOE announces its latest monetary policy decision - 17 December 2020

  • Prior 0.10%
  • Bank rate votes 0-0-9 vs 0-0-9 expected
  • Gilts purchases £875 billion
  • Corporate bond purchases £20 billion
  • Total asset program £895 billion (unchanged)
  • Existing stance of monetary policy remains appropriate
  • Vaccine likely to reduce downside risks to economic outlook
  • Recent global activity has been affected by increase in virus cases
  • Q4 GDP likely to be a little weaker than expected in November report
  • Outlook for the economy remains unusually uncertain
  • Should market functioning worsen materially again, stands ready to increase pace of asset purchases to ensure effective transmission of monetary policy
  • If needed, there is scope to reevaluate existing technical parameters of QE
  • Extends term-funding scheme by six months
  • Full statement

Besides acknowledging the potential for the vaccine to limit downside risks to the economy, there isn't much change to policy language in general. The BOE still highlights that the outlook is still "unusually uncertain", while maintaining its pledge for more QE.

The current stance is largely expected given that they have their hands tied with regards to Brexit. The pound is little changed from the decision here with cable still holding near the highs at 1.3618 while EUR/GBP is contesting its 200-day moving average @ 0.8985.