BoE: prematurely blowing its load
- After its second emergency MPC meeting in a little over a week, the BoE has announced a rate cut to its effective lower bound of 0.1% and £200bn of QE. The former matched my expectation for its forthcoming meeting, but QE was far larger.- Purchases will complete as soon as operationally possible. If the previous maximum weekly rate could be maintained, this would last until November.
- Unless new record flows can sustain, or issuance directly monetised, the BoE could be buying bonds well beyond the current shock. With little room to extend or raise QE’s purchase pace, the BoE has blown its whole load worryingly early.
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