BoE fires its bazucas - ANZ

Analysts at ANZ explained that although a rate cut from the BoE was expected, the size and extent of unconventional measures surprised with its boldness.

Key Quotes:

"In terms of the latter, the BoE will: purchase GBP60bn of gilts and GBP10bn of corporate bonds over the next six months and introduce a Term Funding Scheme to ensure lenders pass on the benefits of the rate cut to borrowers. The central bank’s forward guidance flagged additional easing if necessary (although the BoE thinks the lower bound for interest rates is just above zero)."

"Significantly, the BoE has altered its inflation target from a 18-24 months to the “longer term”.

Governor Carney said that in such extraordinary circumstances the bank would tolerate an inflation overshoot, likely from a declined sterling. To not do so would come at a cost of even further lost output and job losses in the UK."