London (AFP)

The Bank of England (BoE) is expected to keep its key rate unchanged on Thursday after its monetary policy meeting, but could be more optimistic about the recovery thanks to progress in vaccination and the lifting of health restrictions.

The issuing body will publish at noon (11:00 GMT) the decision of its monetary policy committee on rates, but also its quarterly report on the economy as well as its inflation forecasts.

Analysts expect the BoE "to leave its key rate at a record low of 0.1% and maintain its broad stimulus program" the same, notes Howard Archer, economist at EY Item Club.

On the other hand, "it seems very likely that the Bank of England will revise upwards its growth forecasts for the British economy in 2021 (...) and improve its projections" for employment, he underlines.

The Bank currently expects growth of 5% in 2021 and an average unemployment rate of 6.5% for the current year.

In March, it had maintained its key rate at a historic low of 0.1% but had deemed the outlook for the second quarter "slightly better" than in February, on the cusp of deconfinement in the United Kingdom.

Since then, non-essential businesses have reopened, such as outdoor restaurants and bars, as well as gyms, among others, while Britons are allowed to move around the country.

The next step on May 17 should see the reopening of indoor restaurants and hotels, and the start of authorization for international travel with a three-color system of sanitary conditions depending on the state of the epidemic at destination.

- Time for the BoE -

Inflation rebounded in March in the UK to 0.7% year on year compared to 0.4% in February, mainly on fuel and clothing and rising prices are now part of the risks for the monetary authorities just like a stagnation of activity.

Most economists expect inflation to accelerate in the coming months but generally believe it should stay below the BoE's 2% target, and contained enough for the British Monetary Institute to n not considering a turn of the screw on short-term rates.

"In the end, the tightening of monetary policy is a question of timing, but the BoE cannot ignore the economic data and this meeting could be the occasion to signal the starting point", remarks Neil Wilson, of Markets. Com.

He adds that the partial unemployment program which has brought employment to the forefront by financing wages up to 80% up to the amount of 2,500 pounds per month "runs until September, so the BoE has time and can wait until September. 'in August".

The analyst also points out that besides the BoE, the elections in Scotland on Thursday could help shine the spotlight on the pound.

© 2021 AFP