May 2021 Monetary Policy Report Overview
May 2021
Monetary Policy Report
Ben Broadbent
Andy Haldane
Becky Maule
Friday 7 May 2021
Andy will give you an overview of the
Monetary Policy Report
Then we’ll have Q&A session with Ben and Andy
Please submit questions in the chat box as we go and I’ll put
some to them
Plan of the session
2
Quick tour of the Report
Economy has weathered the winter a bit better than expected
Restrictions easing a little faster
Furlough scheme extended to the Autumn
Investment and job prospects looking more positive
Evidence consumers willing to spend a little more of their savings
Further fiscal stimulus here and abroad – but some payback further out
Commodity prices and other input costs have risen
Yields and sterling a little higher
What’s changed since February?
4
Output profile
Bank Confidential: Official Sensitive
Output higher at every point
But two-paced recovery – fast then slow
Forecast summary
First phase – fast recovery
7
Economy re-opens, households’ spending picks up
BANK CONFIDENTIAL - OFFICIAL SENSITIVE
8
Investment also picking up, supported by super-deduction
BANK CONFIDENTIAL - OFFICIAL SENSITIVE
9
Furlough scheme insulates the labour market and vacancies
rise
BANK CONFIDENTIAL - OFFICIAL SENSITIVE
10
Higher input costs starting to feed through, contributing to
return of inflation to target
BANK CONFIDENTIAL - OFFICIAL SENSITIVE
11
Second phase – slow recovery
12
Interest rates and sterling have risen since February
BANK CONFIDENTIAL - OFFICIAL SENSITIVE
13
14
May
February
Output
15
May
February
Unemployment
16
May
February
CPI inflation
•
Unchanged at the meeting – Bank Rate of 0.1%, target stock of QE of £895bn.
•
MPC guidance also (largely) unchanged:
“The MPC will continue to monitor the situation closely and will take whatever action is necessary to
achieve its remit. The Committee does not intend to tighten monetary policy at least until there is
clear evidence that significant progress is being made in eliminating spare capacity and achieving
the 2% inflation target sustainably.”
Monetary policy
17
Q&A
The May 2021 Monetary Policy Report discusses the economic changes since February, highlighting a better-than-expected recovery, easing restrictions, fiscal stimulus measures, rising input costs, and a two-paced recovery pattern. It includes forecasts for a fast initial recovery phase, reopening of the economy with increased household spending, rising investments supported by incentives, and the impact of the furlough scheme on the labor market. The report also notes the beginning of inflation returning to target levels due to higher input costs.
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Presentation Transcript
May 2021 Monetary Policy Report Ben Broadbent Andy Haldane Becky Maule Friday 7 May 2021
Plan of the session Andy will give you an overview of the Monetary Policy Report Then we ll have Q&A session with Ben and Andy Please submit questions in the chat box as we go and I ll put some to them 2
Whats changed since February? Economy has weathered the winter a bit better than expected Restrictions easing a little faster Furlough scheme extended to the Autumn Investment and job prospects looking more positive Evidence consumers willing to spend a little more of their savings Further fiscal stimulus here and abroad but some payback further out Commodity prices and other input costs have risen Yields and sterling a little higher 4
Output profile Output higher at every point But two-paced recovery fast then slow Bank Confidential: Official Sensitive
Economy re-opens, households spending picks up BANK CONFIDENTIAL - OFFICIAL SENSITIVE 8
Investment also picking up, supported by super-deduction BANK CONFIDENTIAL - OFFICIAL SENSITIVE 9
Furlough scheme insulates the labour market and vacancies rise BANK CONFIDENTIAL - OFFICIAL SENSITIVE 10
Higher input costs starting to feed through, contributing to return of inflation to target BANK CONFIDENTIAL - OFFICIAL SENSITIVE 11
Interest rates and sterling have risen since February BANK CONFIDENTIAL - OFFICIAL SENSITIVE 13
Output May February 14
Unemployment May February 15
CPI inflation May February 16
Monetary policy Unchanged at the meeting Bank Rate of 0.1%, target stock of QE of 895bn. MPC guidance also (largely) unchanged: The MPC will continue to monitor the situation closely and will take whatever action is necessary to achieve its remit. The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably. 17
