Bank of England Holds Off Extra Stimulus, Unemployment Set to Hit 7.5 Per Cent

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The bank also left its target for buying government and corporate bonds unchanged at 745 billion pounds ($980 billion).

The decision to hold off more stimulus was widely expected as the uncertainty over the pandemic could require more action later, economists say.

New figures due next week are expected to show the economy contracted almost 19 per cent in the second quarter from the previous three-month period. That would be better than the central bank’s forecast in May for a 25 per cent drop. Yet the recovery from that historic plunge is now also expected to be more gradual.

The Bank of England said the economy was not expected to return to pre-pandemic levels before the end of 2021, with outlook highly uncertain.

The minutes of the bank’s meeting showed that its policymakers are particularly concerned that the rise in unemployment could prove to be more persistent than expected. Unemployment, meanwhile, is expected to hit 7.5 per cent this year.

They said they were worried that the economy could recover slowly as uncertainty over the pandemic leads some households and businesses to hold off spending.

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