BOE Minutes: Recovery takes time, risks to GDP projection skewed to the downside

Following the BOE’s policy announcement, the central bank released the minutes of the meeting, with the key highlights found below (via Reuters).

Market participants attach some weight to the possibility of a negative bank rate

The market path for interest rates averages zero over the forecast period

Market-implied path for bank rate has changed little since the august report, moves below zero during 2021

Household spending and GDP are expected to pick up in 2021 Q1

The level of activity in the first quarter is expected to remain materially lower than in 2019 Q4

The UK trade and GDP are also likely to be affected during an initial period of adjustment

Over the remainder of the forecast period, GDP is projected to recover further

Recovery takes time, however, and the risks around the GDP projection are judged to be skewed to the downside

The committee will keep the asset purchase programme under review

If the outlook for inflation weakens, the committee stands ready to take whatever additional action is necessary to achieve its remit

Committee does not intend to tighten monetary policy at least until it sees clear evidence of significant progress being made in eliminating spare capacity and achieving the 2% inflation target sustainably