London (AFP)

The Bank of England could announce Thursday an increase in its asset purchase program to help the United Kingdom in the face of the deep economic crisis caused by the containment due to the Covid-19 pandemic.

This extension of QE (for quantitative easing), which had already been increased by 200 billion pounds and brought to 645 billion at the start of the pandemic, is largely expected by observers.

Already at the last meeting in early May, two of the nine officials on the bank's monetary policy committee had voted to increase the program by £ 100 billion. And Governor Andrew Bailey hadn't shut the door on future monetary easing if necessary.

He said again recently that the Bank of England was ready to act.

QE's policy is to buy back debt and therefore inject liquidity into the economy, in order to stimulate activity. These massive takeovers also help to keep the rate at which the government is going into debt to finance its aid measures low.

However, the key interest rate set by the Bank of England, currently at 0.1%, an historic low, should not budge, although speculation around a negative rate has been rife in recent weeks .

"If the Bank should announce a greater easing, we think it wants to keep some firepower for the end of the year and to be able to announce a set of measures in the event of a recovery slippage", underlined Barclays analysts. Inflation fell to 0.5% year on year in May, a level seen more since June 2016.

"The further fall in inflation in May is probably just the start of an extended period of very weak price pressure which we believe should lead to further quantitative easing by the Bank of 'England ", reacted the research house Capital Economics.

- Slower than expected recovery -

If the monetary institute expects a GDP rebound of 15% in 2021, after a collapse of 14% in 2020, prudence remains in order. The Governor of the Bank of England said in late May that the economic recovery was likely to be "longer and more difficult" than anticipated.

If "there are reasons to believe that economic activity will rebound at a faster rate than in many past recessions (...), it is also possible that the pace of activity recovery will be limited by the persistent prudence of households and businesses, even if the official measures of social distancing are relaxed ", he had explained in a tribune on the website of the newspaper The Guardian.

For the moment, the current regulations set the distance between each person at two meters to avoid the risk of contamination. But the pressure is on the government to reduce this distance to give a boost to bars, restaurants and hotels, whose reopening is scheduled for early July.

If the health situation seems to be improving in the United Kingdom, the country remains the most mourning in Europe, with more than 40,000 victims, and the third worldwide, behind the United States and Brazil.

© 2020 AFP