The Bank Of England's Fresh Economic Support

The Bank Of England's Fresh Economic Support

over 3 years ago2 mins

It’s nice when the Bank Of England (BoE) shows you it cares: the central bank announced on Thursday it’d pump an extra $195 billion into the UK economy 🇬🇧

What does this mean?

The BoE agreed to buy a fresh round of government bonds, which makes this the fourth time since March that it’s flooded the UK economy with cash to give it a boost. And it might not be done yet: the central bank said it’ll take even more action if it needs to.

The announcement came as the BoE lowered its economic growth estimate for the UK: it’s now expecting the economy to shrink 2% this quarter, down from the 5.4% growth it predicted in August 📊 That probably has something to do with the country’s imminent four-week lockdown, but Brexit – yep, Brexit’s still happening – isn’t exactly helping: the BoE warned that unless businesses start preparing, the economy will take another hit next quarter.

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Why should I care?

The UK’s mounting job losses – 2,600 more of which came from Lloyds bank and department store chain John Lewis on Thursday – likely influenced the BoE’s decision too ✂️ But the BoE might be hoping its new bond-buying measures will help stem the tide: the more money it introduces into the economy, after all, the further the cost of borrowing will fall – which should, in theory, help businesses keep ticking along with their workforces intact.

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With the US election still hanging in the balance, America’s central bank opted not to make policy changes at its own meeting on Thursday 🏦 It’s previously said it would do whatever it took to help the economy, but that government action was a quicker way to put cash in people’s hands. Uh, about that: the government couldn’t agree on a support package before Tuesday’s election, and it’s anyone’s guess when it ever will.

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