Bank of England Holds Base Rate at 0.1%... Expands Bond Holdings to 219 Trillion Won

[Asia Economy Reporter Ki-min Lee] The Bank of England (BOE), the central bank of the United Kingdom, has decided to keep the base interest rate unchanged and expand its asset purchase program.

The Bank of England's Monetary Policy Committee (MPC) announced on the 5th that, following its regular November meeting on the 4th (local time), it unanimously decided to maintain the base interest rate at the current 0.1%.

As the economic shock from the spread of the novel coronavirus infection (COVID-19) intensified, the BOE held a special MPC meeting on March 10 and sharply cut the base interest rate from 0.75% to 0.25%. On March 19, another special meeting was held, lowering the base rate further from 0.25% to 0.1%, a 0.15 percentage point cut. The 0.1% rate is the lowest level in the history of UK base interest rates.

Following the regular March meeting held a week later, the MPC has decided to keep the rate at 0.1% through six subsequent regular meetings.

In addition, the MPC decided to increase the balance of its holdings of government bonds and other securities by an additional ?150 billion (approximately 219 trillion KRW).

At the special meeting on March 19, the BOE decided to expand the balance of its holdings of government bonds (?435 billion) and non-financial corporate bonds (?10 billion), which had been maintained at a freeze, by ?200 billion (approximately 292 trillion KRW). Subsequently, at the June regular meeting, it decided to increase the holdings by another ?100 billion (approximately 146 trillion KRW).

Expanding the balance of held securities is effective in supplying new liquidity to the financial system and lowering borrowing costs for companies and others.

This content was produced with the assistance of AI translation services.