During the early phase of COVID-19 the Monetary Policy Committee decided that “a least regret approach is needed, delivering stimulus sooner rather than later, and thus minimising the risk that the stimulus delivered turns out not to be enough”.
This strategy involved rapidly cutting the OCR by 75 basis points to 0.25 percent in March 2020, committing to keep it at that level for at least 12 months, and launching an alphabet soup of schemes and facilities designed to keep interest rates low and the financial system functioning.9 As we progressed further through 2020 and into early 2021, we had a considerable amount of monetary stimulus in place to support our objectives, and the immediate economic impact of the virus was less severe than we had feared.