Bank Of England Hikes QE By £50 Billion As Expected, As China Cuts Benchmark Rate In Surprising Move

Tyler Durden's picture


While everyone was expecting the BOE to return back to QEasing with a £50 Billion increase in its asset purchase program(me), to a total of £375 billion, which is what just happened, the bigger news came 1 second before the BOE announcement, with China declaring it has cut benchmark interest rates as once again the fate of the whole world is in the hands of small groups of academics, promising each other bottles of Bollinger if they can only get the S&P500 over 1,400. In other words, once again small groups of people around the world sat down and conspired (perfectly legally) to manipulate global interest rates. No hearings are scheduled.

From the BOE:

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.  The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £50 billion to a total of £375 billion.


UK output has barely grown for a year and a half and is estimated to have fallen in both of the past two quarters.  The pace of expansion in most of the United Kingdom’s main export markets also appears to have slowed.  Business indicators point to a continuation of that weakness in the near term, both at home and abroad.  In spite of the progress made at the latest European Council, concerns remain about the indebtedness and competitiveness of several euro-area economies, and that is weighing on confidence here.  The correspondingly weaker outlook for UK output growth means that the margin of economic slack is likely to be greater and more persistent.


CPI inflation fell to 2.8% in May and is likely to edge down further in the near term.  Commodity prices have fallen, which should help to moderate external price pressures.  And pay growth remains subdued. Given the continuing drag from economic slack, that should ensure inflation continues to ease into the medium term. 


At its meeting today, the Committee agreed that the Funding for Lending Scheme, which would be launched shortly, was a welcome initiative.  It also noted recent and prospective actions to ease liquidity constraints within the banking system.  Taken together with reduced pressure on household real incomes, on the back of lower commodity prices, and the continued stimulus from past monetary policy actions, that should sustain a gradual strengthening of output growth.


But against the background of continuing tight credit conditions and fiscal consolidation, the increased drag from the heightened tensions within the euro area meant that, without additional monetary stimulus, it was more likely than not that inflation would undershoot the target in the medium term.  The Committee therefore voted to increase the size of its programme of asset purchases, financed by the issuance of central bank reserves, by £50 billion to a total of £375 billion.  The Committee also voted to maintain Bank Rate at 0.5%. The Committee expects the announced programme of asset purchases to take four months to complete.  The scale of the programme will be kept under review.


The minutes of the meeting will be published at 9.30am on Wednesday 18 July.

And from the PBOC:

The People's Bank of China decided to cut financial institutions RMB benchmark deposit and lending interest rates since July 6, 2012. One-year benchmark deposit rate cut of 0.25 percentage points, year benchmark lending interest rate cut by 0.31 percentage points; other deposit and lending interest rates and individual housing provident fund deposit and lending rates be adjusted accordingly.


Since the same day, the lower limit of the floating range of lending rates of financial institutions was adjusted to 0.7 times the benchmark interest rate. Individual housing loans interest rate floating range should not be adjusted, financial institutions should continue to strictly enforce the differentiation of the housing credit policy, to continue to curb speculative investment buyers. (End)

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Thu, 07/05/2012 - 07:07 | 2588177 Tom Green Swedish
Tom Green Swedish's picture


Thu, 07/05/2012 - 07:11 | 2588184 CPL
CPL's picture




Thu, 07/05/2012 - 07:22 | 2588200 Popo
Popo's picture

How dare they increase the value of gold!  ; )

Thu, 07/05/2012 - 07:25 | 2588203 Aziz
Aziz's picture

China: number 1 practitioner of US Citizenism.

Thu, 07/05/2012 - 07:59 | 2588246 twocents
twocents's picture

They didn't, it just got knocked down again!

Thu, 07/05/2012 - 10:53 | 2588862 old naughty
old naughty's picture


for Bollinger.

Thu, 07/05/2012 - 10:25 | 2588667 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Distinction without a difference.

Thu, 07/05/2012 - 07:17 | 2588191 THX 1178
THX 1178's picture

I didn't realize profits were privatized in a communist state.

Thu, 07/05/2012 - 07:46 | 2588222 Peter Pan
Peter Pan's picture

It has gone beyond communism and theft and is headed for anarchy. Bernanke has screwed millions of decent savers by compressing interest rates to rdiculous levels below inflation in order to accommodate the federal deficit yet Barclays is subjected to fines for doing much the same thing. If they pushed rates up they were doing savers a favour. If they were pushing them down they were accommodating the central banks.

Somehow the expense, pain and uncertainty for all this falls the most on thse who can afford it least as always.

Thu, 07/05/2012 - 09:36 | 2588458 CH1
CH1's picture

It has gone beyond communism and theft and is headed for anarchy

No, my friend, this is precisely the opposite of anarchy.

This is fascism: a state-corporate partnership.

Anarchy is no ruler at all - no uniforms, no parties, no bosses. And, contrary to the usual propaganda (and some violent faux-anarchists), anarchy is peaceful, being predicated on non-aggression.

Perhaps you meant chaos?

Thu, 07/05/2012 - 07:10 | 2588180 CPL
CPL's picture

£375 billion


That's 600,000,000,000 USD

That's 600,000,000,000 Canuck Bux


Just so everyone remembers what a BILLION is.

Thu, 07/05/2012 - 07:16 | 2588190 Sudden Debt
Sudden Debt's picture

I even remeber what 100 euro is!!!!

YES, I'M THAT OLD!!! 35!!

Thu, 07/05/2012 - 09:24 | 2588443 Jumbotron
Jumbotron's picture

Sudden Debt said....

I even remeber what 100 euro is!!!!

YES, I'M THAT OLD!!! 35!!

I'm 48.  I drink your Social Security it's drank for me when it goes bust by 2023.  LOL !

Thu, 07/05/2012 - 07:21 | 2588197 EscapeKey
EscapeKey's picture

US GDP / UK GDP = ~7. $600bn x 7 = $4.2tn, had a comparable program been launched in the US. But all eyes are on the US.

UK GDP = ~$2.26tn. UK QE programs so far has been around 25% of UK GDP.

John Mauldin (in his book "Endgame") stated that the BoE already (in 2010) owned 30% of all outstanding gilts. What's the current figure?

Thu, 07/05/2012 - 07:30 | 2588207 forrestdweller
forrestdweller's picture

that is about 12.000 dollar each in the UK.

Thu, 07/05/2012 - 07:10 | 2588181 jover
jover's picture

What is i have 100 trillion in my pocket right now


Thu, 07/05/2012 - 07:57 | 2588238 Peter Pan
Peter Pan's picture

Dear Governor of the bank of Engand.

Your use of zeroes is getting dangerously close to our patented multi zero system and any breach of our patents, copyrights and other zero based intellectual property rights will result in legal action being taken against you.

I kindly suggest that instead of adding zeroes to your national debt and QE efforts, that you instead take zeroes off excessive debt. This will obviate the need for further zeroes.

On behalf of my nation I wish you luck, but warn you that luck cannot protect you from stupidity forever.

Tally ho

Robert Mugabe

Thu, 07/05/2012 - 07:13 | 2588182 Sudden Debt
Sudden Debt's picture

just imagine how many people could have a job with all that money....

For the easy math, 50.000 pounds a year, 1 MILLION PEOPLE!!

but no... they rather throw it in the bottomless pits of banking....

There are 17 million unemployed in Europe....


But no... 3 to 4 TRILLION QE to the bottomless pits of banking....



Thu, 07/05/2012 - 07:13 | 2588186 CPL
CPL's picture

But...but...but...trickle down economics...or urinal puck, something like that...I was told there would be a Jubilee

Thu, 07/05/2012 - 07:17 | 2588192 Eclipse89
Eclipse89's picture

Don't worry just put your terrapins as collateral and the ECB will give you 50.000€

Thu, 07/05/2012 - 07:20 | 2588195 Dr. Engali
Dr. Engali's picture

I don't know about you but I've been trickled on enough.

Thu, 07/05/2012 - 07:26 | 2588204 Oldballplayer
Oldballplayer's picture

Trickle down costs about $100 more where I come from.

Thu, 07/05/2012 - 08:29 | 2588315 Peter Pan
Peter Pan's picture

Dr Engali, that was bloody funny. They do say after all, that trickle down economics is nothing more than the rich pissing down on the poor.



Thu, 07/05/2012 - 07:20 | 2588196 firstdivision
firstdivision's picture

I got your trickle down.

-R. Kelly

Thu, 07/05/2012 - 07:22 | 2588202 EscapeKey
EscapeKey's picture

Well, you're just a brazen communist, suggesting that others but the elite should get any free money.

Thu, 07/05/2012 - 07:36 | 2588211 Sudden Debt
Sudden Debt's picture


But if you're throwing money away, why not startup companies that produces... wind turbines for example or rebuild the roads and get everybody to work.

Now more money thrown away, more inflation, rising unemployment...

It's like if unemployment stays high, inflation isn't a danger so they won't fix employment.


Thu, 07/05/2012 - 07:44 | 2588218 EscapeKey
EscapeKey's picture

I disagree about the inflation part - giving away all the money to the cronied 1% creates less inflation than had the money been spread evenly through society, you know, in a completely NON-communistic manner like Palin's oil-profit wealth distribution scheme which was clearly very capitalistic in its approach.

Thu, 07/05/2012 - 07:32 | 2588210 LeBalance
LeBalance's picture

Hookers and Blow!  Jobs are for little people. (eric c on cocaine,lol)

Thu, 07/05/2012 - 10:01 | 2588559 Bansters-in-my-...
Bansters-in-my- feces's picture

Hey you hairy monster...!

Stop thinking,that is illegaland will be punished accordingly.

Sincerly,your Gov.

Thu, 07/05/2012 - 07:17 | 2588187 genr8n
genr8n's picture

ECB cut now 100% chance.

However that's now BoE and BoC cards on the table - both with a pair of Kings

ECB still to show its hand.


Thu, 07/05/2012 - 07:15 | 2588188 firstdivision
firstdivision's picture

...and the Sterling rises on this news.  Are the algos programmed to do the opposite of reality?

Thu, 07/05/2012 - 07:22 | 2588201 GeneMarchbanks
GeneMarchbanks's picture

Watch what happens if the ECB cut is more than the expected 25. It'll be glorious.

King €!

Thu, 07/05/2012 - 07:16 | 2588189 Dr. Engali
Dr. Engali's picture

50 billion is already priced in. So what next BOE? Surprise me.

Thu, 07/05/2012 - 07:20 | 2588194 sudzee
sudzee's picture

50 billion is not even enough to pay banker bonuses this year.

Thu, 07/05/2012 - 07:21 | 2588198 hugovanderbubble
hugovanderbubble's picture

NO RRR careful

Thu, 07/05/2012 - 07:36 | 2588206 dizzyfingers
dizzyfingers's picture

Worsest to even worser-est.

Thu, 07/05/2012 - 07:31 | 2588208 Downtoolong
Downtoolong's picture

Because it’s good for the people, it’s good for the children, it’s good for the economy, it will help you get a job and buy a house, it will help you finally sell your house, it will allow you to retire, it will make you rich…….hello, are you muppets listening to me?

Screw it then, we’re doing it because we can and so my buddies and I in the banking industry can get rich.  

Thu, 07/05/2012 - 07:37 | 2588212 chump666
chump666's picture

just means the private sector of Asia will contiue to dump Asian currecies and buy USDs on inflation/operational cost blowouts, will 100% cap stock rallies.

as for the uk who on earth would invest there once safen flows dry up?

Thu, 07/05/2012 - 07:37 | 2588213 twocents
twocents's picture


100 billion, 200 billion 300 billion




Thu, 07/05/2012 - 07:43 | 2588216 muppet investor
muppet investor's picture

The two enemies of the people are criminals and government, 

so let us tie the second down with the chains of the Constitution so 

the second will not become the legalized version of the first.

-Thomas Jefferson

Thu, 07/05/2012 - 08:31 | 2588321 Peter Pan
Peter Pan's picture

I hate to tell you this but the two enemies have combined to become one.

Thu, 07/05/2012 - 08:49 | 2588376 TrulyBelieving
TrulyBelieving's picture

The second has replaced the chains of the Constitution with arugula.

Thu, 07/05/2012 - 10:00 | 2588554 Vince Clortho
Vince Clortho's picture

Govt is the second tier of the criminal operation.  First tier is the Decision makers who dictate what govt policy will be.

Jefferson would be astonished to see how far downhill things have gone.

Thu, 07/05/2012 - 07:46 | 2588221 fonzannoon
fonzannoon's picture

ECB 1/4pt now what?

Thu, 07/05/2012 - 07:54 | 2588240 sudzee
sudzee's picture

Banks need to sell off some toxic waste at full market to pay for libor fraud.

Thu, 07/05/2012 - 08:06 | 2588261 terryfuckwit
terryfuckwit's picture

Please mifter mervyn the king fing .. half of all qe should be spent on the yellow shiny stuff. If Asia and all the central banks is doin it why it is not our gret counchry also for to be stackin the shiny yellow. Might mean we ar ables affording ambulence and schools fo our chidren in the future.. Never to late to do the right thing....

Thu, 07/05/2012 - 08:39 | 2588351 Peter Pan
Peter Pan's picture

Gordon Brown sold off a stack of the gold and has virtually lost well over $15 billion for the people of England. And the Brits had the audacity to chase Ronald Biggs for years for a lousy $60 million in today's money as a result of the great train robbery.

Just goes to show the different treatment you get if you are part of the establishment.

I would hate to think how much Ronald Biggs would have had today if he used the whole lot to buy gold.

Thu, 07/05/2012 - 08:14 | 2588270 tony wilson
tony wilson's picture

the medicated brits get sodomized every day.

they are so numb and tired they do not even realize that a flacid  degenerate circumscised rothshield penis is inside them.

when they do get angry it is at the blacks and the foreigners claiming housing allowance.

or at a rioter who gets 2 years in prison for stealing a bottle of water and they say it is not long enough.

this printing from nothing is so out of control a false flag distraction will need to happen.

and iran is the bilderbergs country choosen for rape and depleted uranium death.

you see it is so expensive spraying that barium all the time these mad men will be looking for easier control options


Thu, 07/05/2012 - 08:35 | 2588332 nowhereman
nowhereman's picture

Look,   I don't know how to break this to you,     but the money to cover the London Whale losses had to come from somewhere.   You weren't expecting JPM to take the loss, were you?

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