Rising virus rates threaten economy, says Bank of England

A man wearing a mask walks past the Bank of England in London

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The Bank of England has warned that the recent rise in coronavirus cases could threaten the UK economy’s recovery.

It also said doubts about the UK’s future trading relationship with the EU posed a risk, as it held interest rates at 0.1% – a historic low.

It said the economy had recovered much of the output lost during lockdown but the outlook remained “unusually uncertain”.

It also signalled it had no plan to raise rates until the end of the year.

It said it would wait until “significant progress” had been made in getting inflation back to the Bank’s 2% target – something it does not expect until early 2021.

The UK’s inflation rate is currently at a five-year low of 0.2%.

“We expect interest rates to be no higher than 0.1% for the next five years,” said Andrew Wishart, UK economist at Capital Economics.

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