Bank of England leaves UK interest rates at 0.1%; bond selloff continues – as it happened

Graeme Wearden

from on 2021-03-18 16:49 (#5FG9J)

Rolling coverage of the latest economic and financial news

Latest: Bond selloff continues after dovish Fed meeting
Nasdaq down 1% as tech stocks hit
BoE leaves interest rates at record lows
Bank: Restrictions could rise faster than thought
Furlough scheme means lower jobless peak
Economic outlook improving, but range of views about the future
UK online job adverts at one-year high

4.49pm GMT

And finally..... European stock markets have closed, with Germany's DAX leading the way.

The FTSE 100 index ended 17 points higher at 6779. Financial stocks rallied, following the jump in bond yields, along with mining stocks, but property firms and energy companies dropped (thanks to the slump in oil today)

A mostly solid day for European equities - Stoxx 600 up 0.5%, FTSE 100 up 0.3%, DAX up 1.3%, CAC up 0.2%, IBEX down 1.6%

Last night, the Federal Reserve maintained its dovish stance and that triggered the bullish moves seen in European stocks today. Several hours ago the Bank of England kept their policy unchanged too, so that contributed to the positive move also.

Jerome Powell, the head of the Fed, announced the US economy is predicted to grow at a faster rate than initially thought in 2021 but at the same time, rates are likely to stay near zero through 2023 - this acted as a green light for the bulls. Mr Powell cautioned that higher inflation is on the cards but it should only be temporary and therefore not warrant higher interest rates.

4.38pm GMT

Another day of rotation on Wall Street - with banks and manufacturers in demand, and tech stocks and oil companies out of favour:

Heat map of the S&P 500's performance so far today

The index as a whole is currently down 0.31% for the day

Financial and Industrials are leading the market today while Technology and Energy are the worst performing sectors

(Source https://t.co/eb7IrY15Vo) pic.twitter.com/VNsJNyeVXS

4.15pm GMT

BT has committed to investing 12bn in faster broadband connections to 20m UK homes, including in remote rural areas, after agreeing return on investment incentives with Ofcom.

However, some rival operators warned that Ofcom's broadband plan could mean price rises for consumers.....

3.51pm GMT

Factories in Philadelphia have reported their strongest growth in 50 years, in another clear sign that the US economy is picking up.

The Federal Reserve Bank of Philadelphia's latest survey of factories showed conditions in the region jumped to the highest level since 1973, with firms reporting a pick-up in orders and shipments.

The Philly Fed Reserve's business activity index shot up to its highest reading in nearly 50 years to 51.8 in March from 23.1 in February - far past the expectation for the index to drop to 23.0. Any reading above zero indicates growth in the manufacturing sector.

Philly Fed #manufacturing blows the door off expectations for March, rising to a nearly 50 year high of 51.8. #Shipments and new #orders activity surged. #Hiring increased. Firms are grappling with #shortages and skills mismatches in the pool of available #labor. pic.twitter.com/yxxO3nl48z

Philly Fed Prices Paid hit highest reading (it's a diffusion index) at 75.9 since 1980 pic.twitter.com/SNY4RWyF4v

3.32pm GMT

The oil price has taken a tumble today, with US crude down 4.2% at $61.85 per barrel and Brent crude 4% lower at $65.33.

That's partly because the dollar is strengthening today, but also reflects worries about a third wave of Covid-19 hitting Europe's economy, especially with the AstraZeneca vaccine rollouts suspended in some EU countries earlier this week.

Crude prices are declining for a fifth consecutive day as concerns grow that Europe won't have a regular summer. The crude demand outlook for the US appears to be the complete opposite for the eurozone. Europe is seeing a third straight week of rising of COVID cases and with vaccination hurdles remaining in place, the outlook does not seem it will be getting better anytime soon.

A strong dollar is emerging post-Fed decision as short-end rates appear anchored, while the long-end of the curve is free to rise. A strong dollar is accelerating the weakness in oil prices.

US crude oil futures (WTI active contract) is down -4.4% for the single largest single-day loss since Oct 28th. Ag and industrial commodities are broadly steady at the moment despite the rising inflation expectations pic.twitter.com/YUB9dOk5HE

3.11pm GMT

UK coach and bus operator National Express is certainly keen for Covid-19 lockdowns to lift.

It slumped to a 445m loss for 2020 after coronavirus travel restrictions led to an 80% fall in passenger numbers last year.

When travel restrictions have been lifted, we have seen a rapid recovery in demand.

Across the business we have reduced costs, exited certain contracts and accessed government support schemes, to ensure that when we emerge from the pandemic the group will be leaner, fitter and financially stronger."

2.58pm GMT

Here's the Financial Times's take on the Bank of England's improved economic outlook, and relaxed comments on rising bond yields.

The Bank of England upgraded its outlook for the UK economy on Thursday, but stressed it was in no hurry to reduce its support to boost the recovery from the coronavirus crisis.

After the March Monetary Policy Committee meeting, the central bank said that financial market moves in the past six weeks, which have seen sterling and the cost of government borrowing rise, had been warranted by the better immediate prospects for recovery.

Chris Giles: Bank of England upgrades outlook for UK economy https://t.co/9hGOqXNoPu

2.35pm GMT

Tech stocks are suffering from the bond selloff.

Over in New York, the Nasdaq has fallen by over 1.5% in the first hour of trading, shedding 213 points to 13,311 points. Video conferencing firm Zoom (-3.4%) and payment company PayPal (-3%) are among the fallers.

Dow ekes out gain even as Nasdaq skids 175 points amid bond-yield surge https://t.co/mxcJHWjlXs

2.27pm GMT

Back in the markets, the selloff in government bonds is continuing as investors continue to price in rising inflation.

The yield (or effective interest rate) on US 10-year Treasuries has jumped to 1.75% today, a 14-month high, as prices keep falling.

Global 10s and 30s Yields: pic.twitter.com/y62hqp8UIJ

UK 10-year Gilt yield slips to 0.88% after Bank of England keeps rates and size of bond-buying on hold, still up 5 bps on day pic.twitter.com/8T0bFyyGwX

The moves came after Fed Chair Jerome Powell indicated he wasn't concerned over the recent surge in long-term yields -- with his focus still on whether financial conditions remained accommodative. Rates have surged this year on expectations that stimulus spending and vaccine rollouts will fuel a sharper economic recovery and a pickup in inflation.

Powell has given the green light to higher 10- and 30-year yields as progress out of the pandemic accelerates," said BMO Capital Markets' Ian Lyngen. Underlying inflation expectations remain elevated and will remain a bedrock of the bearish trend in Treasuries until those assumptions are challenged. For now, it doesn't pay to fight the cheaper and steeper yield curve."

Treasury yields breached more key levels as bond traders boosted bets that the Federal Reserve will allow inflation to overshoot as the U.S. economy recovers https://t.co/oeXtNxdgNo via @markets

2.03pm GMT

Over in America, the number of people filing new jobless claims has jumped unexpectedly.

The weekly initial jobless claims' total rose to 770,000 last week (on a seasonally-adjusted basis), jolting economists who had expected a drop to 700,000.

UI claims fell to 1.03 million (746K UI initial claims NSA + 282K PUA claims) last week, the anniversary of the crisis.

Over a million initial UI + PUA claims have been filed almost every week over the last 52 weeks of the crisis.#joblessclaims 1/ pic.twitter.com/r2LpUtpUio

Initial UI claims rose to 770K SA, marking 52 straight weeks of claims above the worst levels of the Great Recession in another reminder of how sharp and severe this crisis has been.#joblessclaims 2/ pic.twitter.com/rGAAL9HQ7s

The steep drop in PUA claims was largely driven by Ohio where initial PUA claims dropped from 262K to 45K.

PUA claims in OH accounted for *over half* of national claims in recent weeks, an implausible surge that appears to now be reversing.#joblessclaims 3/ pic.twitter.com/e8wr4dGP48

As we hit the 1 year anniversary of the pandemic in the U.S., claims are still historically elevated. Initial claims are still above any comparable point in previous recession. There's still a long way to go before we're fully recovered from the crisis.#joblessclaims 6/6 pic.twitter.com/CEqgc9VrQc

Over a million Americans filed claims for unemployment benefits last week... That's akin to every man, woman and child in Austin, Texas, losing their jobs. And a reminder that the economic recovery isn't there yet for a lot of people... https://t.co/mt2iCtsVxG pic.twitter.com/0M4Tw96GYN

1.54pm GMT

Bank of England chief economist Andy Haldane has declared that the UK is on track for a rapid recovery (confirming that he's still on the upbeat wing of the MPC).

But Haldane also warned the pandemic could increase inequality in the labour market.

Bank of England Chief Economist Andy Haldane said on Thursday that he expected a rapid economic recovery would soon be underway but warned of the risk that existing patterns of social disadvantage had deepened because of COVID.

As I've been saying for months - drawing on the economics of coiled springs, and crouching tigers, and Chicken Lickens' - I do think more likely than not we are (set) for a rapid-fire recovery. That is coming, and I think that is coming soon," he said.

1.40pm GMT

The Bank of England has become less gloomy about unemployment amid signs that budget measures and a more resilient than expected economy will improve the UK's jobs' outlook, my colleague Larry Elliott writes.

More here:

1.31pm GMT

Daniele Antonucci, chief economist & macro strategist at Quintet Private Bank, says the Bank of England is walking the same tightrope as the Federal Reserve (which raised its growth forecasts last night, while sounding cautious).

On the one hand, it wants to project confidence in the economic recovery, casting the recent rise in yields as a reflection of improving growth expectations.

On the other hand, the Bank is still conscious of the significant uncertainties surrounding the recovery - despite a June target for lifting all restrictions - and as such is wary of any unwarranted tightening in financial conditions.

Central bankers often like to highlight that the outlook is unusually uncertain", but the Monetary Policy Committee is feeling a little more comfortable about the prospects for the economy than at its last meeting six weeks ago.

The latest budget confirmed that government lifelines for the labour market will continue, the vaccine rollout is progressing at pace, and a gargantuan stimulus package across the Atlantic should have positive spillover effects across the globe. Against this backdrop, the UK economy is poised for a strong rebound this year.

The tone of the meeting has remained cautious, in line with the stance adopted by the other major central banks over the last week. The Bank of England is facing the same cross-currents: since its previous meeting in February, most developments - notably fresh rounds of fiscal stimulus domestically and abroad - have had positive implications for the economic outlook, but downside risks and uncertainty concerning the evolution of the pandemic are still prominent.

The Bank of England is cautiously monitoring developments for now. An accommodative policy setting is still needed to support the incipient recovery. But there is uncertainty surrounding the existing degree of spare capacity and about relative dynamics in supply and demand going forward. Which means that the Bank of England should be equally ready for its next move being further easing or the beginning of a tightening course."

Looking ahead, the most interesting debate with regard to UK policy will be around the sequencing of policy normalization.

Under former Governor Carney, it was understood that the balance sheet would not be unwound until the policy rate reached 1.5%, whereas Governor Andrew Bailey has hinted that the balance sheet could be normalized prior to rate hikes - which could lead to a steeper UK gilt curve.

1.19pm GMT

The Bank of England also points out that the global economic growth has been a little stronger' than it expected at its last meeting in February.

President Joe Biden's substantial' $1.9trn stimulus package should provide significant additional support' to the economic outlook, the BoE adds.

[Since the February forecasts] developments in global GDP growth have been a little stronger than anticipated, and the substantial new US fiscal stimulus package should provide significant additional support to the outlook.

In part reflecting this and alongside positive news on some vaccination programmes, advanced economy longer-term government bond yields have risen rapidly to levels similar to those seen shortly before the pandemic.

But @bankofengland signaled today that they see the rise in yields since the start of the year as consistent with an improving outlook.

This chart puts yields in a long run context and shows that they remain at extraordinarily low levels historically. pic.twitter.com/CLEroUZL9H

12.38pm GMT

Although the Bank of England's MPC voted 9-0 to leave interest rates and QE unchanged, the committee have a range of views about the economic outlook.

The minutes point out that there are signs of recovery in the economy:

Since the MPC's previous meeting, the news on near-term economic activity had been positive, although the extent to which that news changed the medium-term outlook was less clear.

On the upside, for example, receding fears of infection, further progress in the vaccination programme, the extension of government support schemes, and less voluntary social distancing could allow households to resume more normal spending behaviour and start to run down a greater proportion of their accumulated savings than had previously been anticipated, boosting jobs and investment.

On the downside, households and businesses could continue to exercise caution in their consumption and investment decisions, while delays in vaccination programmes globally or the emergence of vaccine-resistant variants of the virus could trigger a renewed rise in infections and further periods of restrictions on economic activity in the future

12.28pm GMT

The decision to extend the UK's furlough scheme until the end of September means UK unemployment will probably rise less than previously feared, the Bank says:

The minutes of this month's meeting explain:

The LFS unemployment rate had risen to 5.1% in the three months to December, but it was likely that labour market slack had remained higher than implied by this measure.

The extension of the Government's employment support schemes, beyond the point at which most restrictions on activity might be lifted, was likely to mean that the near-term rise in the LFS unemployment rate would be more moderate than had been suggested by the MPC's February Report projections, which had been constructed on the basis of existing government policy at that time.

12.16pm GMT

The Bank also flags up that the UK economy shrank by less than expected in January, but is still around 10% smaller than before the pandemic began.

UK GDP fell by 2.9% in January. This was less weak than expected, due mainly to developments in public sector output, but still leaves GDP around 10% below its 2019 Q4 level.

The news in recent plans for the easing of restrictions on activity may be consistent with a slightly stronger outlook for consumption growth in 2021 Q2 than was anticipated in the February Report, although it is less clear that this represents news to the MPC's medium-term forecast.

12.11pm GMT

It's possible that the restrictions on the UK economy could be lifted somewhat more rapidly' than forecast back in early February, the Bank of England states:

In a statement explaining today's interest rate decision, the BoE says:

The rates of Covid infections and hospitalisations have fallen markedly across the United Kingdom and the vaccination programme is proceeding at a rapid pace. Plans for the easing of restrictions on activity have been announced and envisage that restrictions could be lifted somewhat more rapidly than was assumed in the February Report.

Budget 2021, published in March, contained a number of significant new policy announcements, including the extension of the Coronavirus Job Retention Scheme and other measures to support the economy in the near term which had not been reflected in the February Report.

12.05pm GMT

At its meeting ending on 17 March 2021, the MPC voted unanimously to maintain #BankRate at 0.1%. https://t.co/5O78q5m2Cu pic.twitter.com/55SHmVHAV4

12.02pm GMT

The Bank of England has voted unanimously to leave UK interest rates unchanged at 0.1%, as expected.

The Bank's monetary policy committee has also left its 895bn quantitative easing programme unchanged, meaning it will continue to buy up to 875bn of UK government bonds (and hold 20bn of corporate debt).

Bank of England left interest rates unchanged at 0.10% & maintained the targeted stock of asset purchases at 895 billion at March #MPC meeting. As fully expected were unanimous 9-0 votes for both decisions by MPC. #BOE #BankofEngland #interestrates #QE

11.59am GMT

Here comes the Bank of England's decision, in a busy couple of days for central bank news...

In the past 24 hours, we've had the Fed, BCB, Norges Bank, CBRT and now it is the Bank of England's turn... I may need more coffee

11.27am GMT

The UK government has cut grants for electric car buyers, to the horror of the automotive industry as it tries to rapidly shift away from fossil fuels.

The maximum grant for electric cars has been reduced to 2,500 with immediate effect on Thursday, from 3,000. The government has also lowered the price cap for cars eligible for the subsidy from 50,000 to 35,000.

11.22am GMT

Online job adverts in the UK have hit their highest level since the first lockdown a year ago.

It's a sign that the employment market is picking up, as firms plan for the end of the Covid-19 lockdown restrictions.

Excluding the unknown" category, compared with 5 March 2021 the volume of online job adverts increased in all Adzuna categories except legal", which fell by 8 percentage points. On 12 March 2021 legal" job adverts on Adzuna stood at 72% of their average level in February 2020.

The transport, logistics and warehouse" category saw the largest week-on-week increase in weekly online job adverts of 23 percentage points to 159% of its average level in February 2020. This was followed by the domestic help" and energy, oil and gas" categories, which both saw week-on-week increases of 10 percentage points.

We've released our latest economic and society impact indicators as part of our response to the #COVID19 pandemic https://t.co/iWlRmew9xd pic.twitter.com/GrMrU2xnQo

Data from @Adzuna show on 12 March 2021, total online job adverts were at 93% of their average level in February 2020.

This is the highest weekly level seen since 12 March 2020, driven by rises across all UK countries and regions https://t.co/K0bJL0Mj47

Shipping data from @exactEarth show 291 daily ship visits on average in the week ending 14 March 2021.

This is a 17% drop from last week, similar to the fall seen in the same week last year, which coincided with the early impacts of #COVID19 in the UK https://t.co/Z5EG6u0PiM pic.twitter.com/07RW4L67mu

In the week to 13 March 2021, figures from @Springboard_ show overall retail footfall in the UK was at 47% of its level in the equivalent week of 2020.

This is an increase of 5 percentage points from last week https://t.co/TDSA2XyLXu pic.twitter.com/BuBucDjjYd

11.18am GMT

More central bank action: Turkey's central bank has raised its policy interest rate to 19%, a higher move than expected.

Reuters has the details:

Turkey's central bank hiked its policy rate by a more than expected 200 basis points to 19% on Thursday to address a sliding lira and rising prices, in what was seen as a credibility test given President Tayyip Erdogan's opposition to tight policy.

In a Reuters poll, almost all of the 21 economists expected a 100-point rate hike. The lira responded with a 2.0% jump against the dollar.

Turkey's Central Bank hikes policy interest rate by 200 points, from 17% to 19%.

100 points above the expectations

#Turkey lira gains after 100bps higher hike than expected to 19% from 17%. pic.twitter.com/wxKnBsBX67

11.08am GMT

Here's some reaction to today's bond selloff:

10-year yield tops 1.7%. This will resume the sector rotation in stocks. pic.twitter.com/QIiJZFk40L

Happy day-after-Fed meeting: Bond yields climbing to new highs, risk assets lower and dollar bouncing back. Jobless claims today with 700k expected - a reminder why Fed is staying easy.

10.51am GMT

The latest eurozone trade data confirm that there was a plunge in UK imports and exports with Europe in January, after the Brexit withdrawal agreement ended, and as the pandemic continued to hit trade.

Eurostat reports that EU exports to the UK fell by 27.4% year-on-year, while imports from the UK tumbled by 59.5% compared with January 2020.

Euro area trade in goods surplus 6.3 bn in January, 8.4 bn surplus for EU https://t.co/mLwfSVbXMM pic.twitter.com/e4cmWBfBDz

10.21am GMT

Carole Bayer Sager, the writer of hits including A Groovy Kind of Love and That's What Friends Are For, has sold the rights to her extensive back catalogue of songs to London-listed music royalties investment firm Hipgnosis.

10.12am GMT

Ocado, the online grocer, has reported a 40% surge in sales in the last three months and said it would benefit from the dramatic and permanent shift" towards online shopping over the past year.

Ocado said revenues had grown 39.7% to 599m in the 13 weeks to 28 February, with average orders per week rising 2.5% to 329,000.

Pleasingly for Ocado, the switch from Waitrose to M&S hasn't resulted in any sour grapes, with M&S products continuing to be well received and consistently constituting over 25% of the average basket.

While there will inevitably be changes to demand once life returns to some semblance of normality, Ocado remains well positioned to capitalise on the permanent shift to online grocery. And looking forward, as travel restrictions ease, they will be able to sign new deals and partnerships, most likely in the second half of this year, as international partners remain interested in Ocado's technology offering. Further deals for their leading technology from new and existing partners should act as a positive share price catalyst.

9.45am GMT

Energy news: National Grid is acquiring the UK's biggest local electricity distribution company, Western Power Distribution, as part of a move to increase its exposure to electricity amid the push towards cleaner energy.

Today we're announcing a strategic portfolio repositioning, including the 7.8bn acquisition of @wpduk. #netzero

When we look at the long term, we believe that the pivot that we are making today will enable us to take a much bigger role in the current energy transition."

Western Power Distribution (WPD) is Britain's biggest single power network operator but under the country's partially competitive market, it does not sell directly to end users.

National Grid owns another part of the system - the high voltage transmission network which takes energy from power plants and circulates it nationally.

9.26am GMT

Consumer campaigners are urging the government and the City regulator to intervene in a rescue scheme proposed by the sub-prime lender Amigo, saying it could enrich the firm's directors while some of Britain's poorest borrowers miss out on up to 1bn in compensation.

They have called on the Financial Conduct Authority (FCA) to block plans to limit redress payments to nearly a million current and former customers who were potentially mis-sold unaffordable loans by Amigo, which is the most complained about financial lender in the UK.

9.20am GMT

Over in Oslo, Norway's central bank has left interest rates at record lows of zero, but warned that they may rise in the second half of this year.

The Covid-19 pandemic has led to a sharp downturn in the Norwegian economy. Activity has picked up since spring 2020, but the recovery is being held back by higher infection rates and strict containment measures. On the other hand, information from the health authorities suggests that a large portion of the adult population in Norway will be vaccinated before the end of summer.

At the same time, global economic developments are better than expected. This may result in a faster pick-up in economic activity than previously projected.

Norges Bank: The policy rate forecast implies a gradual rise from the latter half of 2021. This implies a somewhat faster rate rise than projected in December. pic.twitter.com/bBRKayzCDg

Norges Bank says policy rate will most likely be raised in latter half of 2021 $NOK https://t.co/pz2fPOzBo8

9.10am GMT

Today's rise in US bond yields is weighing on the tech sector, with the Nasdaq down 1% in pre-market trading.

Higher bond yields signal rising inflation, which undermines the value of fast-growing tech firms whose high valuations are based on future profit expectations.

European stocks rise, Nasdaq-100 futures slump after Fed decision as yield on U.S. 10-year surges above 1.7% https://t.co/S20PTDHK8Q pic.twitter.com/EXxwvOdPH5

Global stocks - except tech - cheer dovish Fed as global yields jump. Asian & European stock indexes advanced, while US Futures slumped. Bonds crash w/US 10y yields jump to 1.71%, 10y Bunds to -0.27% after Fed lifted growth & inflation outlook. Gold 1738. #Bitcoin gains to $58.4k pic.twitter.com/XoaTEO05JR

9.04am GMT

The FT has a good take on the rise in US Treasury yields today, after the Fed predicted stronger growth and more robust inflation.

Long-term US government bonds sold off in early European trading after the Federal Reserve lifted its growth and inflation forecasts but stuck to its plans to keep short-term rates low until at least 2024.

The 10-year Treasury yield, a key marker of borrowing costs for global financial markets, rose as much as 0.096 percentage points to 1.738% as investors factored in stronger economic growth and price rises.

US 10-year Treasury yield tops 1.7% as Fed forecasts reverberate https://t.co/Qjr2pF1JR5

8.52am GMT

In the bond markets, the yield on America's 10-year Treasury bonds has jumped in early trading, as investors digest last night's Federal Reserve meeting.

The 10-year Treasury yield has risen over 1.7% for the first time since January 2020 (meaning that the price of the bond has fallen).

10-year Treasury yield rises above 1.7% https://t.co/su6zRX93dg pic.twitter.com/vxskR35pEg

*U.S. 10-YEAR YIELD RISES ABOVE 1.7% TO HIGHEST SINCE JAN. 2020 - BBG

Powell remains laser-focused on the lacklustre job market, which will take some time [to recover], no matter how well the economy performs", and continues to play down the risk of inflation, even as inflation expectations reach multi-year highs.

The most interesting part of his speech came in the question-and-answer session where he indicated that he was not worried about the recent run-up in Treasury yields. The more dovish Powell is, the higher bond yields go, and his comments will do nothing little to deter the bond vigilantes from pushing yields ever higher.

8.34am GMT

Germany's main stock index has hit a new record high in early trading, led by its auto sector.

The DAX has opened 0.65% higher at 14,692 points, extending its rally despite concerns that a third wave of Covid-19 infections could force new restrictions.

8.20am GMT

The medium-sized FTSE 250 index, which contains more UK-focused companies, has opened 0.25% higher, up 50 points at 21608.

Commercial property group Hammerson (+4.6%), cinema chain Cineworld (+5.1%) and cruise operator Carnival (+2%) are in the top risers.

8.13am GMT

The FTSE 100 index has opened a little higher, up 10 points or 0.17% at 6773 points.

Gold and silver miner Fresnillo (+2.1%) is among the risers, after precious metals prices rose following the Fed announcement. Miners are also rising, with Rio Tinto up 1.4% and copper producer Antofagasta up 1.7%.

8.00am GMT

Michael Matthews, fund manager at Invesco, says the Bank of England's meeting comes against an improving economic backdrop:

The UK economy is likely to experience a relatively vigorous expansion in the second quarter as Covid restrictions are lifted.

This recovery has been further supported by the Chancellor's recent budget which extended the furlough scheme and delayed the onset of fiscal consolidation to 2023.

Whilst there is little doubting the consensus for no change', the market will be looking for any hint of a shift in the MPC's bias, either through voting or outlook.

If the MPC emphasises the strength of the economic recovery, it could signal to investors a sooner than expected withdrawal of monetary stimulus.

7.53am GMT

Asia-Pacific stock markets mostly pushed higher today after the Federal Reserve raised its US growth forecasts and pledged to maintain its accommodative monetary policy.

If the Fed isn't going to induce tightening, it's very bullish for risky assets.

We should be seeing a mild rally in Asian assets and currencies."

7.26am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After a dovish performance from the US Federal Reserve last night, investors are looking to hear the Bank of England's views on the state of the UK economy.

Firstly, the bank needs to set the record straight that there will be no need for negative interest and the market players need to eradicate those expectations.

Secondly, the bank will need to embrace the remarkable progress on the vaccine front, and how that has improved the economic health.

When we see actual data coming in that suggests that we're on track to perhaps achieve substantial further progress, then we'll say so.

And we'll say so well in advance of any decision to actually taper."

Now is not the time to talk about tapering, Fed Chair Jerome Powell says. "When we see that we are on track to achieve substantial further progress, then we will say so well in advance of any decision to actually taper." https://t.co/wkAsg7UITW pic.twitter.com/JBzrI4wltF

Wall Street rallied after Fed's Powell soothed worries over a preemptive tightening. Dow climbed 0.6% and closed >33,000 for the first time. pic.twitter.com/lXGm7eTEqu

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