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| - The Bank of England on Thursday projected Britain's economic recovery on the back of the nation's successful vaccines rollout, as it froze interest rates and stimulus. The central bank slashed this year's economic growth forecast to 5.0 percent from 7.25 percent -- but also lifted the guidance for next year to 7.25 percent from 6.25 percent. Policymakers meanwhile voted unanimously to keep its key interest rate at a record-low 0.1 percent, the BoE said in a statement after the first meeting since Britain's divorce from the European Union at the start of January. And although the economy is set to tank by 4.0 percent in the first three months of this year, a recovery should then take root as the rapid vaccines rollout boosts consumer spending, according to the bank's latest outlook. The BoE added that economic activity was still forecast return to pre-Covid levels in the first quarter of 2022, despite the current downturn. "The ... central forecast assumes that Covid-related restrictions and people's health concerns weigh on activity in the near term, but that the vaccination programme leads to those easing," governor Andrew Bailey told journalists. The economy was "projected to recover strongly from the second quarter of 2021, towards pre-Covid levels", Bailey added, noting that the vaccine programme's swift progress was "very good news". "I want to congratulate and pay tribute to everybody who's involved -- it's a great story and it is reflected in our forecast." Much of the UK re-entered lockdown in early January to curb a variant strain that was deemed more transmissible, with restrictions similar to initial Covid curbs imposed in the second quarter of 2020. However, almost 10.5 million people in Britain have now received a first dose of a Covid-19 vaccine. Nevertheless, despite inoculation drives, recent UK and global activity has been "affected by an increase in Covid cases, including from newly identified strains of the virus, and the associated reimposition of restrictions", the BoE said. The bank also noted that Britain and the European Union had reached a trade agreement that has applied since January 1, averting a chaotic no-deal Brexit. And it signalled that Britain would likely avoid a double-dip recession with marginal growth expected in the final three months of last year. The BoE added that it was "appropriate" to start preparations for the potential introduction of negative interest rates -- but stressed this was not an imminent prospect. A negative interest rate would likely see retail banks further cutting their own borrowing costs, which would be unwelcome news for savers but a boost for borrowers. In response to the pandemic, the BoE and UK government have pumped billions of pounds into the British economy to stimulate growth and protect jobs. The central bank said it had maintained its quantitative easing stimulus programme at £895 billion ($1.2 trillion, 1.0 trillion euros). The government has so far spent about £300 billion in emergency measures to combat economic fallout, including a costly subsidy for private sector wages. js-rfj/wai
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