According to a recent Reuters poll, economists expect the Bank of England to step up its QE efforts to support the British economy, which is reeling under the effects of the coronavirus pandemic and expected to worsen in the wake of the fresh resurgence in cases. In addition to the economic impact of the pandemic, concerns about a possible no deal Brexit are also keeping the economy under strain, which could force the central bank to unleash more monetary stimulus.
The BOE had already cut interest rates to 0.1% earlier this year, but an overwhelming majority of economists feel that the central bank will not announce more rate cuts into negative territory. So far, the BOE has announced QE measures worth 725 billon pounds this year, and economists expect an addition of another 100 billion pounds into the program.
The lockdown earlier this year when the pandemic first hit the nation had caused Britain’s economy to contract by a record 19.8% during Q2 2020. After the lockdown measure were eased and economic activity had resumed, there was some hope for a possible rebound, but a second wave of coronavirus cases recently has prompted reimposition of such measures, which are expected to drag the economy down again.
Economists have forecast that the British economy grew by 16.7% in Q3, which could then fall to a 2.6% growth in Q4. The GDP for the current year is expected to come in at -10.1% but the economy could rebound and post a 6.1% growth in 2021.