{"id":35371,"date":"2018-06-22T07:00:23","date_gmt":"2018-06-22T12:00:23","guid":{"rendered":"http:\/\/olduvai.ca\/?p=35371"},"modified":"2018-06-22T07:00:23","modified_gmt":"2018-06-22T12:00:23","slug":"next-central-bank-puts-qe-unwind-on-the-calendar","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=35371","title":{"rendered":"Next Central Bank Puts QE Unwind on the Calendar"},"content":{"rendered":"
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Next Central Bank Puts QE Unwind on the Calendar<\/a><\/h3>\n<\/header>\n
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The end of an era spreads.<\/strong><\/p>\n

Markets were surprised today when the Bank of England took a \u201chawkish\u201d turn and announced that three out of nine members of its Monetary Policy Committee \u2013 including influential Chief Economist Andrew Haldane, who\u2019d been considered dovish \u2013 voted to raise the Bank Rate to 0.75%, thus dissenting from the majority who kept it at 0.5%. This dissension, particularly by Haldane, communicated to the markets that a rate hike at the next meeting in August is likely. The beaten-down UK pound jumped.<\/p>\n

But less prominent was the announcement<\/a> about the QE unwind.\u00a0Like other central banks, the BoE heavily engaged in QE and maintains a balance sheet of \u00a3435 billion ($577 billion) of British government bonds and \u00a310 billion ($13 billion) in UK corporate bonds that it had acquired during the Brexit kerfuffle.<\/p>\n

Before it starts shedding assets on its balance sheet, however, the BoE wants to raise the Bank Rate enough to where it can cut it \u201cmaterially\u201d if needed, \u201creflecting the Committee\u2019s preference to use Bank Rate as the primary instrument for monetary policy,\u201d as it said.<\/p>\n

In this, it parallels the Fed. The Fed started its QE unwind in October 2017, after it had already raised its target range for the federal funds rate four times.<\/p>\n

The BoE\u2019s previous guidance was that the QE unwind would start when the Bank Rate is \u201caround 2%.\u201d Back in the day when this guidance was given, NIRP had broken out all over Europe, and pundits assumed that the BoE would never be able to raise its rate to anywhere near 2%, and so the QE unwind could never happen.<\/p>\n

Today the BoE moved down its guidance about the beginning of the QE unwind to a time when the Bank Rate is \u201caround 1.5%.\u201d<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Next Central Bank Puts QE Unwind on the Calendar The end of an era spreads. Markets were surprised today when the Bank of England took a \u201chawkish\u201d turn and announced that three out of nine members of its Monetary Policy Committee \u2013 including influential Chief Economist Andrew Haldane, who\u2019d been considered dovish \u2013 voted to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[9284,56,303,661,8701,662,8625,3650,4254,4255],"class_list":["post-35371","post","type-post","status-publish","format-standard","hentry","category-economics","tag-andrew-haldane","tag-bank-of-england","tag-fed","tag-qe","tag-qt","tag-quantitative-easing","tag-quantitative-tightening","tag-us-federal-reserve","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35371","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35371"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35371\/revisions"}],"predecessor-version":[{"id":35372,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35371\/revisions\/35372"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35371"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35371"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35371"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}