Bank of England Cuts Rates 50 Basis Points As Expected

Written March 5, 2009 at 7:01 AM EST by  

The Bank of England has cut Interest Rates by 50 BPS as expected to 0.50% from the previous 1.00%.

In addition, the BOE Announces a £75B Asset Purchase Program.

- Likely majority of assets to be purchased will be Gilts
- Will purchase medium and long term gilts in secondary market
- To finance purchases by issuing central bank reserves
- Operation to last for 3 months
- Still sees substantial risk of undershooting CPI target
- Chancellor Darling sets upper limit on program at £150B

***The GBP initially firmed up but quickly continued to soften up, falling to further session lows.

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