The UK economy will recover "much more rapidly" from the coronavirus crisis than it did from the Global Financial Crisis, according to Bank of England (BoE) governor Andrew Bailey.
The Bank voted unanimously at its meeting on Wednesday to keep interest rates at current 0.1% levels and overwhelmingly to keep its quantitative easing programme at £200m.
It noted an "unusually uncertain" outlook for both the UK and global economies amid the public health pandemic that has conspired to shut most of the world down.
UK GDP would likely fall by 30%, with business investment and sales expected to halve in Q2, unemployment likely to rise sharply and household expenditure to be cut by a third.
Along with its minute notes, the BoE outlined a "plausible" illustrative scenario for the economy ahead of an expected announcement from Prime Minister Boris Johnson at the weekend on plans to begin to ease the lockdown.
Bailey said the scenario suggested the economic recovery would "happen over time, though much more rapidly than the pull back from the Global Financial Crisis".
"Nonetheless, we expect that the effects on demand in the economy will go on for around a year after the lockdown starts to lift," the governor explained.
"We expect that there will be some longer-term damage to the capacity of the economy, but in the scenario, we judge these effects to be relatively small. The role of monetary policy, alongside other government policies, is to support the economy through the next phase and beyond."
The vote to keep Bank Rate at 0.1% was unanimous, according to the Bank's Monetary Policy Committee, with the decision on QE 7-2, with the dissenters wishing to increase the amount of purchases of UK Government bond and sterling non-financial investment-grade bonds by £100m.
Elsewhere, the Bank predicted inflation would slip to below 1% in the coming months, from its 1.5% March level, due to the precipitous fall in the oil price.
These developments should mean investors must "expect more stimulus in the coming months", according to Jon Hudson, UK equities investment manager at Premier Miton.
Stenn Group president Kerstin Braun added that the staying of rates signals the Bank was "reserving firepower for the long recovery ahead".
Braun agreed with Hudson that the Bank could start to buy more bonds from as early as next month, "depending on the extent of the lockdown".
"Like all central banks, the BOE has no other choice but to try to spend its way out of the crisis, leaving the question of who pays the tab for another day.
"With GDP on track to fall 7% this quarter and no consensus on when to begin reopening the economy, it is anybody's guess how long and deep this recession will be.
"While we don't know what the new normal will look like, we do know consumer and business life will not be the same as before, even after social distancing measures are eased."
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The Pensions Management Institute has produced an industry guide to Covid-19.
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