UK: BoE’s decisive response to Brexit – RBC CM

Sam Hill, Senior UK Economist at RBC Capital Markets, suggests that the BoE Bank Rate cut and boost to QE programme along with new cheap bank funding scheme – amongst other measures – amounts to a decisive loosening in policy at the August meeting.

Key Quotes

“RBC looks for a further cut in Bank Rate to a floor of 0.10% at the November MPC meeting.

The package of measures and their complementarity is welcome, but in our view, this won’t prevent a stagnation in the UK economy over H2 2016 and into 2017.

The £60bn QE Gilt purchase programme should exceed any increase in Gilt issuance for this financial year and help underpin yields at low levels, despite the anticipation of the potential for a material loosening in fiscal policy at the Autumn Statement.”