The Bank of England has increased its monetary stimulus by a bigger than anticipated ￡150 billion (US$195 billion) as it tries to boost the economy amid new lockdown measures.
In a statement released yesterday, the central bank’s Monetary Policy Committee said that its challenge is to respond to the economic and financial impact of the resurgence of COVID-19, which has led to the reimposition of widespread restrictions across the UK.
A four-week lockdown began yesterday in England that will keep closed all shops selling items deemed to be non-essential, such as books and clothes, as the government seeks to contain a sharp increase in infections.
Photo: EPA-EFE
The other nations of the UK — Scotland, Wales and Northern Ireland — have also announced wide-ranging restrictions on economic activity.
The latest restrictions will batter an economy that had been just recovering from the sharp recession caused by a spring lockdown.
As a result, the Bank of England was widely expected to respond to the changed economic backdrop.
However, the increase in the bond-buying program is bigger than the ￡100 billion anticipated in financial markets.
The stimulus is aimed at keeping a lid on borrowing rates across the economy to boost lending as well as ensuring that money keeps flowing through the financial system.
The committee also kept its main interest rate unchanged at the record low of 0.1 percent.
The bank said that Britain’s economy would shrink by 11 percent this year, more severe than the 9.5 percent contraction it forecast in August.
GDP is likely to grow by 7.25 percent next year, weaker than a previous forecast of a 9 percent bounce-back, it said.
Britain’s economy, which as well as COVID-19 is facing the risk of a trade shock when its post-Brexit transition with the EU expires on Dec. 31, has been supported by a surge in debt-fueled spending by the government.
Despite the spending, Britain faces the sharpest peak-to-trough contraction of any G20 economy, Moody’s said on Oct. 16 when it cut Britain’s credit rating.
Additional reporting by Reuters
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
RSS