Big bearish move by the BOE: rate cut to 0.25% and 70 billion in QE: 60 billion in government bond buying and 10 billion in corporate bonds. A new lending program called TFS was thrown into the mix.
In addition, BOE Governor Mark Carney is extremely dovish and adds downside pressure. He paints a gloomy picture about growth and the impact of the shock. He also opens the door to further cutting rates. His “coherent, comprehensive and timely” package is having a big impact.
GBP falls across the board with GBP/USD falling around 200 pips. There may be further room to the downside. More below.
Expectations were sky high for BOE action in this meeting, with a rate cut of 0.25% on the cards, as well as more QE, a revamp of the FLS and other options on the table. The first post-Brexit meeting resulted in a “wait and see” statement. The Bank wanted more information: from PMIs (which were terrible), from its own Quarterly Inflation Report (published alongside the decision today) and from the newly formed government. Here is our video preview and you can also read various previews from banks.
GBP/USD traded in a relatively narrow range ahead of the decision
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