The Bank of England today rose to the challenge posed by a financial and economic crisis of historic proportions—the ECB did not. The contrast between the two could not have been starker: it’s the contrast between policymakers and box-ticking bureaucrats, evident in both the actions and the accompanying statements. Both central banks had been caught well behind the curve by the most recent deterioration in the economic and financial outlook. The BOE is now pulling ahead fast, but the ECB is still lagging behind, raising concerns about the Eurozone outlook and cohesiveness. The need for a decisive policy response was underscored today as the Czech National Bank cut rates by 75bp against consensus expectations of 25, and the national banks of Switzerland and Denmark both cut by 50bp. Following today’s decisions, we have lowered our BOE target to 1.50% to be reached with another 100bp cut in December and a 50bp cut in Q1-09. We uphold our 2.0% target for the ECB, to be reached in Q2. The sluggishness of the ECB’s response heightens risks to the EUR in my view, and will exacerbate tensions within the Eurozone, where the sharp downturn in growth combined with concerns on debt issuance to support the financial systems has already contributed to a marked widening in government bond spreads and CDS levels. In addition, it risks heightening pressures on currencies in central and eastern European countries, which are left exposed to still relatively high Eurozone interest rates and greater risks to Eurozone growth. The GBP will also remain under pressure. Sooner or later, however, the decisiveness of the monetary response to the crisis will make a difference, and on this metric the ECB should be very worried: since the onset of the crisis, the ECB’s policy rate has declined by a mere 75bp, compared to 275bp for the BOE and 425bp for the Fed—the Eurozone is more resilient than the US and UK, but not that much more resilient.