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Central Bank Outlook: UK on Hold For Now
BoE Sees No Need for Urgent Further Action
- The August BoE Inflation Report provided some rationale for the MPC decision to not extend its asset purchases. While the Report sees a continued undershoot of the 2% target, the BoE still considers that the risks to the inflation projections to be balanced at the end of the forecast horizon.
- DE View: There is scope for further stimulus, however it is unclear that the BoE would necessarily opt for another round of asset purchases. Instead, with the Governor highlighting the potentially powerful impact of the Funding for Lending Scheme, the MPC as a whole may be more comfortable with any further boost coming from this source. At this juncture, the BoE seems comfortable with the view that it needs to no further urgent action.