Third lockdown unlikely to prompt more QE or negative rates

The prospect of a rapid recovery in GDP in the second half of the year and a rebound in inflation to 2% suggests that the third COVID-19 lockdown won’t prompt the Monetary Policy Committee to launch a fourth increase in quantitative easing at its meeting on Thursday 4^th February. And although the MPC will probably confirm that it is moving closer to being able to use negative interest rates, we think it will disappoint the markets by not implementing them either this year or next.