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Bank of England Boosts Quantitative Easing As Second COVID-19 Lockdown Begins

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Bank of England Boosts Quantitative Easing As Second COVID-19 Lockdown Begins

The Bank of England on Thursday increased its quantitative easing stimulus package by 150 billion pounds ($196 billion) to support the U.K. economy from the coronavirus pandemic as the country enters a second public health lockdown.

Interest rates were maintained at 0.1%. COVID-19 continues to hit jobs, incomes and spending in the U.K. It has put a strain on businesses' cash flow and is threatening the livelihoods of many. 

“Our role is to ensure inflation (the pace of price rises) returns to our 2% target sustainably. Low and stable inflation supports jobs and growth and helps people plan for the future. In response to the spread of Covid, we put in place a package of measures that will help households and businesses,” the Bank of England said in a statement. 

This year, the Bank of England has already cut interest rates and supported the UK economy through 300 billion pounds of quantitative, easing which mainly involves buying large quantities of government bonds. This helps to keep the interest rates on mortgages and business loans low.

Hinesh Patel, portfolio manager at Quilter Investors says the Bank is being accommodating as possible and keeping borrowing costs as low as possible for businesses — but there is a danger they will simply be pushing on a string, as it is becoming harder and harder for many households and SMEs to access the capital they need.

“And so the Treasury has to show some innovative thinking in making sure support is going to the people and businesses that need it most,” Patel said. 

Related Link: Bank of England Boosts Bond Buying By $124B, Maintains Bank Rate

 

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