By Jason Douglas

LONDON--The Bank of England held its benchmark interest rate steady and said the U.K. economy will take until the end of next year to make up the ground lost during the coronavirus pandemic.

The BOE said in a statement that its Monetary Policy Committee agreed unanimously to hold the central bank's benchmark interest rate at 0.1% and the target for its asset-buying program at 745 billion pounds ($977 billion).

Officials said the economy probably shrank around 20% in the second quarter as a nationwide lockdown to contain the coronavirus outbreak was in place. Consumer spending has picked up fast since restrictions were eased, the committee said, but business investment is subdued and unemployment is expected to rise.

"The recovery in demand takes time as health concerns drag on activity," the panel said. Gross domestic product won't rise to the level it was at the end of 2019 until the end of 2021, it said.

The committee said it expects a substantial degree of slack in the economy to persist for the next year and keep inflation below its 2% target, implying officials will be in no hurry to adjust policy.

Write to Jason Douglas at Jason.Douglas@wsj.com

(END) Dow Jones Newswires

August 06, 2020 02:41 ET (06:41 GMT)

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