Bank Of England Likely To Slow Bond Purchases As Economy Rebounds

• The Bank of England is likely to ease its foot off the stimulus pedal and reduce its pace of bond purchases next week as Britain's economy appears to be bouncing back sharply from its COVID pandemic slump.
• Retailers and restaurants are reopening, retail sales exceeded pre-pandemic volumes in March and purchasing managers' indexes in April hit their highest since 2013 as a rapid vaccination program helped reduce a devastating flood of COVID-19 cases at the start of the year to a trickle.
• Just over three months ago, financial markets saw a roughly 50% chance that the BoE would need to cut interest rates below zero for the first time later this year. Now speculation has turned to whether its Monetary Policy Committee will begin to raise rates from their current 0.1% towards the end of 2022.
• A first step is likely to come next week if the BoE slows its government bond purchases from the current pace of 4.4 billion pounds ($6.14 billion) a week, according to economist Phillip Shaw and several other economists.

(Source: Reuters)