All eyes are on QE purchases
There isn't much else to look at for the BOE policy decision later today as they will leave the bank rate unchanged at 0.10% and surely expand the size of its QE programme.
In that lieu, the focus turns to how much will they be willing to go down the road?
The base case is for an increase of around £100 billion, which will take the overall purchase target to £745 billion. However, that is pretty much the bare minimum and unless the central bank wants to run the risk of running thin early again, they may have to do more.
Given that predicament, any increase around £150 billion to £200 billion isn't out of the equation either. That will reaffirm the central bank's commitment to ensure the economic recovery but it then starts to push the boundaries of what they are willing to do.
Negative rates? QE-infinity i.e. debt monetisation? Those ideas wouldn't seem too far-fetched the more you start to push the QE agenda further down the road.
Here are what some banks are expecting in terms of the size of QE purchases:
£100 billion
- HSBC, Danske Bank, TD Securities, Llyods Bank, TD Securities, BofA, Scotiabank
£150 billion
- Deutsche (£125 billion), ING
£200 billion
- Citibank, RBC
I reckon the BOE will want to try and "get away with as much as they can by doing as little as possible". In that sense, £100 billion seems like the logical option but that may leave the market a little disappointed that they're not willing to commit more.
That said, the language and forward guidance - pace of purchases - will also be key to drive market sentiment and the reaction in gilts and the pound later today.
(!) Is there going to be a press conference today? Yes but no.. (!)
I don't see anything official here but there are many in the financial circles that are saying that there is going to be a press conference held at around 1200 to 1300 GMT today, but it will not be open to the public i.e. behind closed doors.
Instead, the remarks and commentary from the press conference will only be embargoed for release at 1330 GMT.
Hence, just take note of this because the BOE doesn't have the best reputation for leaks in the past. As such, the pound could be acting funky if there is any word getting to the streets during the time slots noted above.
