We think that this morning's larger than........>

BOE: We think that this morning's larger than expected issuance announcement

increases the probability of another GBP100bln of QE being announced at next

month's meeting.

- The BoE's GBP200bln of purchases at a pace of GBP13.5bln per week will run out

by the middle of June (particularly as the GBP200bln also includes corporate

bond purchases). We think that in order to keep the gilt market functioning well

the BoE will want QE to keep running at its current pace of GBP13/5bln per week

while issuance is so high. Hence, there is now much more scope for another

GBP100bln of QE to be announced at the 7 May meeting. This would cover the

period of increased issuance already announced to the end of July and also tide

the BoE over to the August Monetary Policy Report.

- By August, the size of the shock to the economy should hopefully be clearer -

if it is not then more issuance and QE would probably be expected then.

Furthermore, the DMO are planning on updating their remit again on June 29 so it

should be much clearer by then whether additional QE is needed to help the

outsized issuance.