The Bank of England is expected to say today that the economy will remain muted due to the pandemic despite the rollout of vaccines in the UK.
BoE Governor Andrew Bailey said on Monday he was more optimistic about the recovery. But he stressed his view came “with a large dose of caution” with Britain still in the grip of a third lockdown and facing the risk of new COVID-19 variants. It comes as a rates decision is imminent today.
The BoE have been caught in a phase of uncertainty, with question marks over Brexit leading to a degree of hesitancy over committing to any particular direction for monetary policy.
In fact, the UK vaccination efforts and relatively calm Brexit process has provided a greater degree of confidence than many would have expected at this point. That reopening drive does raise questions of whether the BoE’s focus should shift away from loosening and towards a potential tightening.