LONDON (Reuters) – Bank of England policymaker Silvana Tenreyro said the main economic boost from progress on COVID-19 vaccines would only come when the jabs are rolled out, and the BoE should prevent rising market interest rates from threatening the recovery.
Tenreyro said progress on creating the vaccines would reduce one of the bigger downside risks to the BoE’s economic forecasts over the medium term, and households might delay spending until vaccines are actually reducing health risks.
Speaking to the Resolution Foundation think tank, Tenreyro said she wanted to avoid a rise in borrowing costs that could threaten the recovery in the economy, something the BoE has sought to prevent this year by ramping up its quantitative easing bond-buying programme to nearly 900 billion pounds ($1.20 trillion).
“My rationale for the recent QE expansion was to mitigate the risk of any tightening in monetary conditions that might make it harder to bring inflation back to target,” she said.
“My view is that the reduction in uncertainty about vaccine production, makes it even more essential that we avoid those risks,” she added.
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(Reporting by David Milliken; Writing by William Schomberg)
