The Bank of England surprised the market todayby increasing the supply of liquidity for it's quantitative easing program instead of announcing it would end the program. In classic two-handed economist talk, the central bank said, "On the one hand, there is a considerable stimulus still working through from the easing in monetary and fiscal policy and the past depreciation of sterling. On the other hand, the need for banks to continue repairing their balance sheets is likely to restrict the availability of credit, and past falls in asset prices and high levels of debt may weigh on spending."(Seriously, you can't write stuff like this as no one would believe me....)
The Bank of Englandcommittee agreed to extend its program of buying government and corporate debt from $125 billion to $175 billion. The new program is expected to take up to three months to complete. The markets had been anticipating an end to the program and the announcement caused big moves. The British pound fell 150 pts, short end UK rates fell 15-20 basis points, and the FTSE rallied 1.45%.