Comments from the Bailey

  • Trying to work out implications for UK and other countries' experiences with negative rates
  • Decision on negative rates is not in-any-sense imminent
  • Evidence suggests economic downturn has not been as severe as in May scenario 'but let's not get carried away'
  • Labour market is probably more relevant for judging inflation risks
  • Now expecting 20% fall in GDP in Q1 and Q2 combined vs 27% in May forecast
  • Slowing of QE pace reflects recent signs from economy and calming of markets since March
  • We are slowing from warp speed QE to something which is still fast by historical standards
  • Trajectory on inflation is for it to fall to very low levels
  • Broadbent: It would be wrong to see slowing QE as a sign of tightening

This fits with the earlier stance of being more-optimistic but the market is brushing it off and selling the pound hard. There was initially a pop on these headlines but only momentarily.