LONDON (UK) – As it waits to see if a possible no-deal Brexit in two weeks intensifies the problems faced by British economy, the Bank of England is expected to refrain from yet more stimulus on Thursday.
London and Brussels are still trying to avoid the shock of import tariffs on trade from Jan. 1, so the BoE looks set to leave its bond-buying programme at 895 billion pounds ($1.2 trillion), having ramped it up by 150 billion pounds last month.
That should provide enough fire-power until late 2021, and the BoE’s Monetary Policy Committee is expected to detail how front-loaded its new bond-buying will be.
The MPC is also likely to keep its benchmark interest rate at a historic low of 0.1% at 1200 GMT.
“We continue to expect a (Brexit) deal will be done,” JP Morgan economist Allan Monks said. “But the main focus from the MPC this week will be any guidance it chooses to offer about how it would react to a no-deal.”
Last month, the BoE said it was “ready to take whatever additional action is necessary to achieve its remit”.
Now it might have to be more explicit, with the Brexit deadline approaching and COVID-19 restrictions spreading again.
Britain’s budget forecasters say a failure to strike a trade deal would wipe 2% off economic output, drive up inflation and unemployment and add to public borrowing of 400 billion pounds this year.
Even with a deal, the BoE thinks the economy will suffer as companies struggle with paperwork, port delays and other effects of leaving the world’s biggest single market.