BoE: slowing stimulus surprisingly soon
- The BoE has increased its asset purchase target by £100bn. Rather than being a top-up until August, though, the MPC will stretch the programme towards yearend. Purchases are slowing surprisingly soon given the still-heavy gilt issuance burden.- Negative rates were not mentioned in the minutes, perhaps showing a desire to avoid the market drawing dots towards an undesirable (non-stimulative) rate cut.
- Roughly 7pp of excess doom is cut from the depths of the BoE’s nowcast in Q2, partly because of a swifter rebound. The response to reduced near-term negativity was surprisingly abrupt, with disappointment likely to prompt more QE later.
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