Bank of England to put an extra £100bn into UK economy - Economics
Policymakers in the Bank of England voted 8-1 to increase the size of the bank's bond-buying programme which is helped to fight the downturn in the economy.
There is also growing evidence that the hit on the economy is now expected to be less drastic as initially predicted. However, the Bank of Englands Monetary Policy Committee (MPC) has agreed to keep interest rates at a record low of 0.1%.
Minutes from the MPC meeting in June said
"Payments data are consistent with a recovery in consumer spending in May and June, and housing activity has started to pick up recently."
However, Mr Bailey warned that the outlook for the economy remained uncertain. He said: "We don't want to get too carried away by this. Let's be clear, we're still living in very unusual times."
The minutes added: "While recent demand and output data had not been quite as negative as expected, other indicators suggested greater risks around the potential for longer-lasting damage to the economy from the pandemic."
This decision has increased the monetary stimulus, which is also known as quantitative easing or (QE) for short to the total size of £745bn pounds.
It must be noted, however, that the Banks chief economist, Andy Haldane, voted against the increase.
He said that the recovery was happening "sooner and materially faster" than originally expected in May.
Samuel Tombs of Pantheon Macroeconomics expects the Bank to increase QE again later this year.
"Unemployment looks set to rise sharply in the second half of this year and to fall back slowly thereafter," he said.
"The resulting prolonged weakness in domestically generated inflation likely will necessitate the MPC doing more to stimulate the economy in the winter."