The Bank of England had its meeting a while ago. They had cut interest rates to 0.10% like most other major central banks earlier, so there was no expectations for another rate cut today. But, the BOE proceeded to expand QE by £100 billion through year-end.
BOE Monetary Policy Decision – 18 June 2020
- Official bank rate unchanged at 0.10%
- Bank rate votes 0-0-9 vs 0-0-9 expected
- Asset purchase program total £745 billion (increase of £100 billion)
- MPC voted 8-1 in favour to increase QE program target
- BOE chief economist Andy Haldane dissented
- Expects total stock of asset purchases to be hit around the turn of the year
- Agreed to increase target to meet inflation goal in the medium-term
- Stands ready to increase the pace of purchases if required
- MPC to keep asset purchase program under review
- Economy, particularly labour market, will take some time to recover
- Outlook for UK and global economies is unusually uncertain
- Expects inflation to fall further below target in the coming months
- Difficult to make inference on recovery path after Q2
The pound got a shot in the arm from the decision here as the BOE meets expectations and delivers on their pledge to support the economy further until at least the end of this year, with another £100 billion added to its QE purchases. The timing suggests that they may scale back a little from the current pace of purchases (before this, the target was scheduled to be met in July). So, that slight taper may be what is being interpreted as a little more hawkish in some sense perhaps.
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