The BoE cut the repo rate by 50 bp to 0.50% and said it would engage in quantitative easing of GBP75 bln. The BoE was widely expected to cut the repo rate by 50bp but the accompanying statement highlighted the risks of a very low interest rate and that a very low bank rate could be counter productive in some markets. The BoE also announced GBP75 bln in quantitative easing and said that it is likely that the majority of all purchases over the next 3 months will be in Gilts. This was slightly more than the GBP60 bln median in last week's Reutes poll, but within the expected GBP40-150 bln range. European debt has rallied on the announcement.
