LONDON — The Bank of England predicted Thursday that the economic downturn in the U.K. economy might be less severe than it thought at the start of the COVID-19 pandemic – even as it warned it would take a longer time to heal the scars.
The central bank opened the door to providing more monetary stimulus as Britain reopens after the pandemic lockdowns and said the economy probably won’t return to pre-pandemic levels until the end of 2021 as spending by consumers and businesses remains weak.
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It also expressed concern about rising rates of unemployment – particularly at a time in which no one knows what will happen next.
“The outlook for the U.K. and global economies remains unusually uncertain,? the bank said in a statement. “It will depend critically on the evolution of the pandemic, measures taken to protect public health, and how governments, households and businesses respond to these.?
The central bank’s Monetary Policy Committee kept its benchmark interest rate at a record low 0.1%. It also kept its target for buying government and corporate bonds – by which it injects money into the economy – at 745 billion pounds ($980 billion).
The decisions on rates and economic stimulus were widely expected as the uncertainty over the pandemic could require more action later, economists say.
U.K. GDP probably shrank by 23% in the second quarter, though a recovery is already underway, the bank said. The economy will likely contract 9.5% for 2020 as a whole, before expanding 9% in 2021 and 3.5% in 2022, according to the bank’s forecasts.
The figures are more optimistic than its predictions issued in May for a 14% drop in the economy this year.
Still, Bank of England Governor Andrew Bailey suggested much was not straightforward.
“The forecast central case … looks quite beguilingly simple,” Bailey said, adding inflation and other measures are forecast to return to target eventually. “And yet we’ve got huge uncertainty and a very big downside risk… There are some very hard yards, to borrow a rugby phrase, to come.?
The minutes of the committee’s meeting showed that policymakers were particularly concerned that the rise in unemployment during the pandemic could prove to be more persistent than expected. The bank forecast that the unemployment rate would rise to 7.5% this year, from 3.75% in 2019.
Policymakers also said they were concerned the recovery may slow if uncertainty over the pandemic leads some households and businesses to hold off spending.
“The committee will continue to monitor the situation closely and stands ready to adjust monetary policy accordingly to meet its remit,? the policymakers said.
Some analysts were surprised by the centra bank’s assessments.
“The Bank of England’s overly optimistic updated economic projections leave the door wide open for more monetary stimulus later this year,” wrote Kallum Pickering, senior economist at Berenberg bank, in a note that began with the headline “Verging on unrealistic.?
“Relative to the obvious challenges ahead linked to the COVID-19 pandemic, highlighted by the recent re-imposition of modest containment measures in major parts of the U.K., the V-shaped recovery that the Bank of England continues to project seems unlikely, to put it mildly.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
