The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. In that context, its challenge is to respond to the severe economic and financial disruption caused by the spread of Covid-19.

At its meeting ending on 6 May 2020, the MPC voted unanimously to maintain Bank Rate at 0.1%.

The Committee voted by a majority of 7-2 for the Bank of England to continue with the programme of £200 billion of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, to take the total stock of these purchases to £645 billion.

Two members preferred to increase the target for the stock of asset purchases by an additional £100 billion at this meeting.

The spread of Covid-19 and the measures to contain it are having a significant impact on the United Kingdom and many countries around the world.

Activity has fallen sharply since the beginning of the year and unemployment has risen markedly.

Economic data have continued to be consistent with a sudden and very marked drop in global activity.

Oil prices have been volatile.

There have, however, been tentative signs of recovery in domestic spending in China, and this is likely to be echoed in other countries that have started to relax Covid-related restrictions on economic activity.

Financial markets have recovered somewhat over recent weeks and risky asset prices have picked up from their lows in mid-March. This in part reflects the actions taken by authorities in the United Kingdom and elsewhere. Global financial conditions have, nevertheless, remained tighter than prior to the outbreak of Covid-19.

The timeliest indicators of UK demand have generally stabilised at very low levels in recent weeks, after unprecedented falls during late March and early April.

Payments data point to a reduction in the level of household consumption of around 30%.

Consumer confidence has declined markedly and housing market activity has practically ceased.

CPI inflation declined to 1.5% in March and is likely to fall below 1% in the next few months, in large part reflecting developments in energy prices.