The BOE cut interest rates for the first time in 7 years and announced a plot to print money out of thin air, in order to buy GILTS and corporate bonds. These “tools” will permit them to artificially lower borrowing costs and enable a select few to benefit from cheap money.
We took these steps because the economic outlook has changed markedly,” Carney told reporters in London on Thursday. “Indicators have all fallen sharply, in most cases to levels last seen in the financial crisis, and in some cases to all-time lows.”
They’ll be buying 60b pounds worth of government bonds over the next six months and an additional 10b for corporates over 18. On top of that shit, they’ll lend 100b to banks.
Oh, and they also menaced markets with a promise to cut rates to zero, if things didn’t improve.
But Carney isn’t a fan of negative rates, mind you.
“The MPC is very clear that we see effective lower bound as a positive number, close to zero, but a positive number,” he said. “I’m not a fan of negative interest rates,” he added, noting that they had produced “negative consequences” elsewhere.
“The measures send a strong signal that the MPC is prepared to look through the inflationary consequences of the post-referendum drop in the pound and focus instead on supporting sentiment and activity,” said Jonathan Loynes, an economist at Capital Economics. “If the economy continues to weaken, the MPC will come under strong pressure to act again, though monetary policy is clearly approaching its limits.”
Their schemes now call for asset purchases of 435b pounds, up from 375b.
Their corporate bond buying plan is perverse, one that will target ‘firms making a material contribution to the UK economy.’
“So the BOE delivered a dovish surprise as regards QE measures,” said Thu Lan Nguyen, a foreign-exchange strategist at Commerzbank AG in Frankfurt. “Only roughly half the market probably had expected an increase of QE, probably less the introduction of corporate bonds. The BOE wants to set a clear signal that it has switched into crisis mode.”
This has all resulted in a gigantic fucking rally in the UK. Men with bad teeth have been buying up stocks, selling pounds and buying up bonds. This of course is more of the same. The purposeful manipulation of yet another central bank to boost asset prices and reduce borrowing costs, which has little to no effect on the ordinary people drolling about London in search for a better life.
The FTSE is higher by 1.7%
The pound is off by 1.4%.
GILTS are rallying.
We have ourselves both a stock and bond rally today, all praise and thanks to the almighty BOE.
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This all has to end horribly right…?
It’s gonna be great
Monopoly should have a central bank prints me money ruleset.