Vaccine rollout eases pressure on BoE to act

LONDON (AP) – The Bank of England (BoE) was expected to keep interest rates on hold yesterday amid rising optimism over the British economy’s near-term prospects in the wake of the rapid rollout of coronavirus vaccines.

The central bank has been proactive through the pandemic, cutting its main interest rate to a record low of 0.1 per cent and splashing out a further GBP450 billion in its bond-buying programme.

Many in financial markets had anticipated the central bank to take more action to help the economy, potentially even a cut in the main interest rate below zero to encourage banks to lend more.

However, the United Kingdom’s (UK) world-leading rollout of coronavirus vaccines has lowered expectations of another move imminently. As of Wednesday, more than 10 million people in the UK have received their first vaccine doses, nearly a fifth of the adult population.

That has spurred hopes that lockdown restrictions will be eased sooner, allowing the economy to recover quickly.

“With the vaccine rollout going well, and cases now falling rapidly, there is a good chance that the economy will record a rapid bounce in activity through the middle of the year,” said James Smith, an economist at ING.

“That in turn reduces the pressure to inject additional stimulus.”