Halister News

(Bloomberg) -- BOE meeting was less dovish than expected, with only Vlieghe voting for a rate cut and only “most” -- not all -- members of the committee expecting policy to be loosened in August, Morgan Stanley economists including Melanie Baker write in a client note.

• Expect BOE to bring rate down to 0.10%; central bank likely see this as the lower bound and signal QE of GBP50b to start in Nov.
• Had earlier expected unanimous 25 bps rate cut to 0.25%
• Further easing will follow; committee discussed a “package” of measures, suggests at least rate cuts and QE
• MPC has been clear on the hierarchy of easing:
  • First rate cuts, seen as marginal instrument of policy; second QE, which they say is an effective policy instrument
  • May also consider some creative options such as funding for lending scheme, or purchasing some assets on a smaller scale (as seen in corporate bonds previously)