BOE announces its latest monetary policy decision - 18 June 2020

  • Prior 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
  • Full statement

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.

Cable was trading around 1.2490 prior to the decision but is up to 1.2540 currently. EUR/GBP is also nudged lower to 0.8970 but is holding at its 100-hour moving average.