Breaking: BOE leaves rates unchanged, expands QE by £150 billion, GBP/USD bounces

The Bank of England's (BOE) Monetary Policy Committee (MPC) decided to leave the benchmark interest rate unchanged at 0.10% at its November policy meeting, as the second nationwide lockdown kicks-in this Thursday. 

The BOE expanded the Quantitative Easing (QE) program by £150 billion to £895 billion.

Follow our live coverage of the BOE ‘Super Thursday’.

Market reaction

The GBP/USD pair picked up bids as the BOE refrained from negative rates. As of writing, the pair recovers to 1.2970 from pre-decision levels of around 1.2940. The spot is still down 0.12% on the day.

Key takeaways from the policy statement (via Reuters)

MPC votes 9-0 to increase asset purchase target.

MPC votes 9-0 to increase gilt purchase target.

MPC votes 9-0 to maintain corporate bond purchase target.

MPC agreed to increase the target stock of purchased the UK government bonds by an additional £150 billion in order to meet the inflation target in the medium term, taking the total stock of government bond purchases to £875 billion

MPC will keep the asset purchase programme under review.

Market contacts expected the MPC to announce an extension to the asset purchase programme at its November meeting of around £100 billion.

As of 4 November, total stock of assets held in the asset purchase facility had reached £717 billion, an increase of £272 billion as part of the combined £300 billion programmes of asset purchases announced on 19 march and 18 June.

Announcing further asset purchases now should support the economy and help to ensure that the unavoidable near-term slowdown in activity was not amplified by a tightening in monetary conditions.

If needed, there was scope to re-evaluate the existing technical parameters of the gilt purchase programme.

Related reads

BOE said to be mulling a controversial move into negative rates

GBP/USD dumps 50 pips on BoE rate cut to negative reports

Bank of England Preview: Lockdown raises chances of negative rates, sterling could suffer


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