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The now-departed BoE Governor Carney detailed that ahead of the emergency 50bp rate cut, which brought the bank rate down to 0.25%, the BoE still had 250bps of easing in hand, analysts at CIBC Capital Markets brief.

Key quotes

“Expect the new BoE Governor Bailey to take rates to the assumed lower bound at 0.1%, while also adding more QE of roughly £60bn – effectively using half of that 250bps of easing.”

“While the UK is discussing potential loan guarantees – totalling £330bn, or 15% of GDP – expect additional fiscal spending, as Q2 GDP is set to materially undershoot the worst on record (-2.7% q/q in Q1 1974).” 

“The UK is suffering from a heightened current account shortfall and the heavy reliance on consumer spending. With the Brexit countdown clock still ticking and the ongoing concerns surrounding Covid-19, sterling headwinds remain elevated.”

“Q2 20: 1.29 | Q4 20: 1.34”