Last reviewed 11 February 2021

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target in a way that helps to sustain growth and employment.

At its February meeting, the Committee judged that the existing stance of monetary policy remains appropriate and voted unanimously to maintain the Bank Rate at 0.1%.

However, the MPC did note that there had been a sharp rise in some shipping costs, which appeared to reflect a pickup in demand for shipping containers alongside a lack of availability of those containers in some parts of the world.

If sustained, the Committee said, this could push up the prices of those goods that were imported to the United Kingdom in this way, especially bulky items for which shipping was a material cost.

It also examined the immediate impact of the announcement on 24 December 2020 of a Trade and Co-operation Agreement (TCA) between the European Union and the United Kingdom.

The MPC decided that there had been relatively little reaction in financial markets to the announcement, the terms of which had been largely in line with expectations of market contacts.

UK GDP is expected to have risen a little in the final quarter of 2020 (Q4) to a level around 8% lower than in the same period in 2019. This is materially stronger than expected in the Bank’s November Report.

While the scale and breadth of the Covid restrictions in place at present mean that they are expected to affect activity more than those in 2020 Q4, their impact is not expected to be as severe as in 2020 Q2, during the UK’s first lockdown.