Economic wrap: BoE breakdown - Westpac

Analysts at Westpac offered an economic wrap.

Key Quotes:

"The Bank of England (BoE) exceeded the market’s easing expectation by cutting 25bps and releasing a multi-pronged easing package and also providing definitively dovish forward guidance. The headlines were:

• Bank Rate cut 25bps to 0.25%
• Further GBP60bn of Gilt purchasing under their Asset Purchasing Programme
• Additional GBP10bn of corporate bond purchases
• Term Funding Scheme (TFS)  to ensure transition of Bank Rate cuts to households and corporates (potential of GBP100bn)
• A total additional package amounting to GBP170bn
• MPC members expect further rate cuts towards zero should data follow their forecasts

The Bank describes these actions as being mutually reinforcing and all of them have the scope for further action. BoE Governor Carney stated in the subsequent Press conference that the Bank viewed Brexit as materially impacting the economy and heralded a “regime change for UK” but countered this by praising the flexibility and underlying strength of the economy.  

US factory orders fell 1.5% in June (vs -1.9% expected), with the ex-transport measure rising 0.4% (vs -0.2% expected). Durable goods orders were tweaked only slightly, June upwards and May downwards."