BAML says it expects no further rate cuts...>

UK VIEW: BAML says it expects no further rate cuts from the BoE after today's

emergency 15bp rate cut to lower bound of 10bp and after it restarted QE by

GBP200bln to take the total stock up to GBP645bln.

- BAML notes the typical rules of thumb would say this is equivalent to 8.5 rate

cuts = GDP boost of about 1.5% after a year, however, "the stimulus this time is

probably smaller than that." 

- "Cutting rates from 25bp to 10bp does little with deposit rates already at

zero. QE has something to shoot at after gilt yields rose in recent days. How

much gets passed through to private borrowers, and how much they want to borrow

in current conditions, are constraints," adds BAML.

- BAML added its "one reservation would be that that the CP purchasing scheme is

not open to those firms most in need (non-investment grade). So while the

numbers overall look impressive (GBP200bln of QE, unlimited size CP scheme, 5%

of loan stock via TFS), the reality could be smaller."