“While not offering any precise guidance on when asset purchases could be expanded, the minutes note that ‘for all members of this group, the prospective weakness in employment and inflation, and downside risks around aspects of the medium-term outlook, might necessitate further monetary policy action’,” said Kallum Pickering at Berenberg Bank.
“We expect the Bank to announce another £200bn in asset purchases by the August meeting at the latest. Given the current pace of purchases, and the split vote at the May meeting, we may get at least half of that by the June meeting already.”
The Bank’s financial stability report warned that its main scenario left companies with a £140bn cash deficit thanks to the lockdown.
“Some businesses will need to access additional sources of finance in order to maintain their productive capacity through the shock,” it added.
Banks will come through the crisis with almost half of their financial buffers eaten away by the recession, while the “sharp fall in economic activity will put pressure on some households’ finance”.
This is caused by £80bn of credit losses, split roughly evenly between UK and overseas customers failing to repay their debts.