The Monetary Policy Committee of the Bank of England (BoE) has decided to leave the benchmark interest rate unchanged at 0.10% at its monetary policy meeting in November, while the second national lockdown begins this Thursday.
The BoE has expanded the Quantitative Easing (QE) program by £ 150 billion to £ 875 billion.
Market reaction
As an initial reaction, GBP / USD has moved higher as the BoE has refrained from negative rates. At the time of writing, the pair is recovering to 1.2970 from the 1.2940 region before the decision.
Key comments from the monetary policy statement (via Reuters):
Monetary Policy Committee (MPC) votes 9-0 to increase asset purchase target.
MPC votes 9-0 to increase government bond purchase target.
MPC votes 9-0 to maintain corporate bond purchase target.
MPC agreed to increase the target stock of UK government bonds purchased by an additional 150 billion pounds to meet the medium-term inflation target, bringing the total stock of purchases of government bonds to 875 billion pounds.
MPC will keep the asset purchase program under review.
Market participants expected the MPC to announce an extension of the asset purchase program at its November meeting of around £ 100bn.
As of November 4, the total stock of assets held in the asset purchase line had reached £ 717 billion, an increase of £ 272 billion as part of the combined asset purchase programs of £ 300 billion. Sterling announced on March 19 and June 18.
The announcement of new asset purchases should now support the economy and help ensure that the inevitable slowdown in activity in the short term is not amplified by a tightening of monetary conditions.
If necessary, there was scope to re-evaluate the existing technical parameters of the government bond purchase program.
.
Credits: Forex Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
