The Bank of England boosted stimulus to the U.K. economy with an additional £100 billion ($131.2 billion) in asset purchases.
The central bank announced Thursday that its monetary policy committee voted 8-1 to increase its asset purchase program to £745 billion. It also voted unanimously to maintain interest rates at 0.1%.
The additional purchases will be financed by the issuance of central bank reserves, the bank said.
While risk-asset prices have recovered from their lows in March, "they have remained sensitive to news on the evolution of the pandemic," a statement by the bank said.
However, recent data suggest that the fall in global gross domestic product in the second quarter will not be as severe as expected, and there are signs of increased consumer spending and services output, as the U.K. begins to emerge from lockdown. Downside risks remain for the global outlook, however, such as the spread of the coronavirus within emerging market economies and the potential for a second wave of infections in developed markets.
U.K. GDP contracted by about 20% in April, having fallen 6% in March, the bank said. "Evidence from more timely indicators suggests that GDP started to recover thereafter."
The labor force survey unemployment rate — a measure of U.K. unemployment — was unchanged in the three months to April at 3.9%, although the bank warned that other indicators suggest the labor market "has weakened materially." The bank also expects a greater number of U.K. employees to be furloughed in the current quarter.
Consumer price index inflation declined to 0.5% in May, from 0.8% in April and 1.5% in March. The MPC manages monetary policy to an inflation target of 2%.