BOE leaves QE unchanged at 125bn (and rate at 0.50%)

inspector_monkfish

(story to follow)

inspector_monkfish

12:01 09Jul09 BoE leaves rates steady, maintains QE total

LONDON, July 9 - The Bank of England surprised markets by announcing no expansion of its quantitative easing scheme on Thursday as it left interest rates unchanged at a record low of 0.5 percent for a fourth month running.

Britain's central bank has been buying assets with newly created money since March and is on track to hit its existing 125 billion pound target later this month.

It said it would review the programme in August.

Markets had widely expected the BoE to increase its asset purchase target by 25 billion pounds, allowing it to continue to pump money into the economy until August when it publishes new quarterly economic forecasts.

Britain's economy is no longer in freefall, as it was at the turn of the year, but bank lending remains weak and a sustained recovery is far from assured.

Unemployment is still rising, manufacturing is still contracting and the recent pick-up in services activity may be little more firms re-stocking after running down inventory.

From a macroeconomic point of view, leaving a gap in asset purchases between late July and early August, when the Bank of England will have more data, will do little harm. But it is likely to fuel the suspicion that the central bank has concluded its quantitative easing policy.

inspector_monkfish

Cable gone through the roof

lemonjelly

Why has cable gone through the roof?
Apologies if a dumb question...

foreversummer

Sorry, an even more dumb question . . . what is cable?!

Foreversummer

dougs

foreversummer wrote: »

Sorry, an even more dumb question . . . what is cable?!

Vince, and he's really cross :rotfl:

sorry, couldn't resist, I'll get me coat

It's really just a financial term for the exchange rate between British pound sterling and the U.S. dollar.

Thrugelmir

inspector_monkfish wrote: »

Cable gone through the roof

Trying to put a political spin on the issue. For once I think he's offtrack.

Our banks are Global players , so he's missing far wider issues.

purch

Cable gone through the roof

Does that mean it would have gone through the floor, if they'd increased the QE package ???

inspector_monkfish

lemonjelly wrote: »

Why has cable gone through the roof?
Apologies if a dumb question...

sorry, had to shoot off.


cable went through the roof because BOE did not turn the printing machine back on for the extra £25bn that some thought they might do

inspector_monkfish

Thrugelmir wrote: »

Trying to put a political spin on the issue. For once I think he's offtrack.

Our banks are Global players , so he's missing far wider issues.

not really, i was just reporting an instant reaction to the BOE announcement.
that was all

it continued throughout the rest of the day to trade up at 1.6380, after spending most of the morning under 1.62

i think its worth pointing out to those that don't always see what can or can't have a big effect on daily fx rates, and this was a good example and shows clearly what the markets feelings are towards QE (less QE = good for the Pound, more QE = bad for the Pound)

inspector_monkfish

purch wrote: »

Does that mean it would have gone through the floor, if they'd increased the QE package ???

most probably