The Financial Policy Committee (FPC) and the Prudential Regulation Committee will also keep an eye on the response of banks to recent measures.
In its meeting held on 25 March, the Monetary Policy Committee (MPC) said it expected the spread of Covid-19 to result in a “very sharp reduction” in activity and predicted consumers would hold off on major purchases including property.
It also said it was probable that GDP would fall sharply in the first half of the year.
Inflation reached 1.7 per cent in February and the MPC said it would probably fall below one per cent in the spring, reflecting the pass-through to fuel prices of the recent and sharp decline in the oil price.
The bank said: “The nature of the economic shock from Covid-19 is very different from those to which the MPC has previously had to respond.
“The scale and duration of the shock to economic activity, while highly uncertain, will be large and sharp but should ultimately prove temporary, particularly if job losses and business failures can be minimised.”