BoE will ease monetary policy to support economy – Danske Bank

Mikael Olai Milhøj, Senior Analyst at Danske Bank, suggests that the recession is likely to force the BoE to ease monetary policy over the next 6M to support the economy.

Key Quotes

“The BoE has communicated it prefers to lower the Bank Rate before using other tools. We expect BoE will need to do both eventually.

We expect the BoE to cut the Bank Rate down from 0.50% to 0.00% and to resume the Asset Purchase Facility (APF), which we anticipate will be expanded in the range GBP150-200bn.

BoE Governor Mark Carney has ruled out a negative Bank Rate due to concerns over bank profitability (but he is not the first one to do so).”