Bank of England: Risk remains for a further increase in QE – Wells Fargo

On Thursday, the Bank of England announced it kept interest rate unchanged at 0.1% and a 100 billion pound increase in the purchase program (QE), in line with market expectations. Analysts at Wells Fargo, think the risk remains for a further increase in the asset purchase target.

Key Quotes: 

“Some elements of the accompanying statement were less dovish in tone. One policymaker voted for no increase in asset purchases. In addition, the BoE said asset purchases would be completed around the turn of the year, which, if it stays within the new £745B cap, would imply a sharp slowdown from the current pace of asset purchases.”

“Considering the adverse market reaction so far and the still less-than-stellar economic prospects, we think the risk remains for a further increase in the asset purchase target, perhaps by around £100B in late Q3 or early Q4.”

“While we expect some appreciation in sterling against a broadly soft U.S. dollar, today’s announcement does not alter our view that the pound will likely remain a laggard among the G10 currencies in the months ahead.”