The BOE's MPC is poised to act today with an....>

BOE: The BOE's MPC is poised to act today with an extension to QE unanimously

expected. The main question is over the size of the extension. Consensus expects

the Bank will announce the asset purchase facility will be expanded by GBP100bln

with risks of a larger expansion and we would agree with this view.

- Given the May statement, we think that flexibility is more important than

longer-term certainty for the MPC and hence the most likely course of action for

the MPC now will be to extend QE by GBP100bln.

- We think at this juncture the MPC will not want to risk disappointing the

market and so the extension to QE will continue to be "completed as soon as is

operationally possible, consistent with improved market functioning."

- We think that the risks are for a larger and more prolonged programme but

unless the increase is only slightly larger than GBP100bln (e.g. GBP125bln), it

is likely that the term over which purchases are to be made would need to be

included - and any end date could be used to calculate a pace of tapering we

don't think the MPC will want to commit to yet.

- For more see our the full MNI BOE Preview.