Coronavirus: Bank of England set for £100bn of QE

Lucy Harley-McKeown
·2 min read
LONDON, ENGLAND - JUNE 01: A man walks past the Bank of England on June 01, 2020 in London, England. The British government further relaxed Covid-19 quarantine measures in England this week, allowing groups of six people from different households to meet in parks and gardens, subject to social distancing rules. Many schools also reopened and vulnerable people who are shielding in their homes are allowed to go outside again. (Photo by Dan Kitwood/Getty Images)
The Bank of England. Photo: Dan Kitwood/Getty Images

The Bank of England (BOE) is set to unleash another round of quantitive easing (QE) next week, say economists, as at least £100bn ($125.45bn) more may be pumped into the economy.

The announcement, expected on Thursday, comes after gross domestic product (GDP) plunged a record 20.4% in April.

Interest rates are set to be held at the all time low of 0.1%, despite speculation that the bank may bring them below zero for the first time, to bring the county out of an economic spiral.

Yesterday, BOE governor Andrew Bailey said in an interview with Sky News that there are signs the UK economy is gradually coming back to life, and that the bank is willing to take action to help the country get through the damage done by the coronavirus pandemic.

READ MORE: Coronavirus: UK economy slowly recovering, says Bank of England chief

The BOE has already given the economy a £200bn cash injection, firing up the money printing presses in March as COVID-19 lockdowns set in.

It has already warned Britain is facing the worst recession for 300 years. Governor Andrew Bailey has revealed policymakers are actively considering further economy-boosting tools including negative interest rates.

Two of the nine person committee voted for the new measures in May, and it is thought the measures will be backed unanimously when the vote comes later this week.

The Press Association reported that experts at Rabobank predict another £100bn could follow as soon as August, though they said it was possible the Bank could go “all in” with a full £200bn on Thursday.

READ MORE: Coronavirus: Government issues urgent call for job creation schemes

On the prospect of negative interest rates, they added: “There has been plenty of market chatter and official talk about negative interest rates.

“This option is ‘under review’, but we don’t think that the monetary policy committee (MPC) is ready to explore this avenue.”