Bank of England sees slower recovery from COVID hit

Updates with announcement

LONDON, Aug 6 (Reuters) - The Bank of England said on Thursday it expected Britain's economy to take longer to get back to its size before the coronavirus pandemic struck and it warned of possible risks from taking interest rates below zero.

The BoE, announcing no change to its key interest rate which stands at just 0.1% or its huge bond-buying programme, said it expected the economy would not recover its end-2019 size until the end of next year.

In May, it had said it thought it might take until the second half of 2021 for the economy to get back to its pre-crisis size.

The BoE also said its review of whether to take rates below zero was ongoing but such a move could hurt banks' balance sheets.

"The MPC will continue to review the appropriateness of a negative policy rate as a policy tool alongside its broader toolkit," it said.

"The MPC has other instruments available — for example, asset purchases and forward guidance. The MPC will continue to assess the appropriate monetary policy stance and will keep the appropriate tools for achieving its remit — including negative policy rates — under review."

(Reporting by UK bureau Writing by William Schomberg Editing by Andy Bruce)

((william.schomberg@thomsonreuters.com; +44 207 542 7778; Reuters Messaging: william.schomberg.reuters.com@reuters.net))

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