Bank of England holds off more stimulus, sees slow recovery

LONDON (AP) - The Bank of England left its benchmark interest rate at a record low of 0.1% on Thursday as it expressed caution about how rapidly the United Kingdom's economy will recover from the COVID-19 pandemic.

The bank also left its target for buying government and corporate bonds unchanged at 745 billion pounds ($980 billion).

The decision to hold off more stimulus was widely expected as the uncertainty over the pandemic could require more action later, economists say.

New figures due next week are expected to show the economy contracted almost 19% in the second quarter from the previous three-month period. That would be better than the central bank's forecast in May for a 25% drop. Yet the recovery from that historic plunge is now also expected to be more gradual.

The Bank of England said the economy was not expected to return to pre-pandemic levels before the end of 2021, with outlook highly uncertain.

The minutes of the bank's meeting showed that its policymakers are particularly concerned that the rise in unemployment could prove to be more persistent than expected. Unemployment, meanwhile, is expected to hit 7.5% this year.

They said they were worried that the economy could recover slowly as uncertainty over the pandemic leads some households and businesses to hold off spending.