Bank of England pumps $124 billion into British economy

The Bank of England poured $124 billion into the British economy in coronavirus aid and maintained a key interest rate at 0.1 percent Thursday at its regular meeting.

Image of Bank of England Gov. Andrew Bailey on March 16. The bank announced Thursday it was pumping $124 billion into the British economy. Photo by Neil Hall

Andy Haldane, the bank’s chief economist, voted against the additional quantitative easing under which the bank buys bonds to increase the supply of money, but all nine members of its policy committee agreed to keep the current interest rate in place.

Before the meeting, some speculated the committee could vote for negative interest rates as an additional tool to increase economic activity.

Thursday’s decision will slow bond purchases from about $16 billion a week to about $6 billion a week.

“We’re slowing from warp speed to something that by any historical standards still looks fast,” Bank of England’s Gov. Andrew Bailey said at a news conference.

The bank said last month the British economy could contract this year to its worst showing in 300 years because of the coronavirus and restrictions set in place. The bank, though, was cautiously more optimistic about the economy this month.

“As partial lifting of the measures takes place, we see signs of some activity returning,” Bailey said. “We don’t want to get too carried away by this. Let’s be clear, we’re still living in very unusual times. While recent demand and output data had not been quite as negative as expected, other indicators suggested greater risks around the potential for longer-lasting damage to the economy from the pandemic.”

ByClyde Hughes