Western Europe November 12, 2020 / 05:09 pm UTC

BoE Comments: Hard Brexit Risks May Warrant More BoE Action

By Andrew Wroblewski

Speaking at the Financial Times event, BoE Governor Bailey said recent news on the efficacy of the vaccine being developed by Pfizer and BioNTech was consistent with the BoE’s assumption that there would be a gradual and progressive improvement in economic conditions that would reflect a gradual advance of treatments. Otherwise, he was seemingly more candid than hitherto about hard Brexit risks and the possible repercussions for BoE policy

Figure 1: Still-Subdued BoE Weekly Asset Purchases

Source: BoE, sterling billion

Indeed, he said the BoE might need to step up monetary support for the economy if the UK and the EU failed to finalize a trade deal and this led to greater economic disruption next year than the central bank’s current forecasts assume. NB: according to its updated projections unveiled last week, the BoE estimates that the economy will grow by 2.5% on average per quarter though 2021 after an assumed 2% q/q fall in the current quarter due to the fresh lockdowns.  

Regardless there are few signs that the BoE  is showing any actual concern at the moment given what are still sedate asset purchases including the weekly numbers announced earlier today, se chart!

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