U.K. assets wobbled on Thursday as traders reacted to the decision by the Bank of England to reduce the rate of government bond purchases while insisting it wasn’t changing monetary policy.
The Bank of England said it was reducing the pace of government bond purchases “somewhat” in what it also said was an “operational decision” that it said “should not be interpreted as a change in the stance of monetary policy.”
Analysts said the new bond-purchase rate, per week, was £3.4 billion, down from £4.4 billion.
Andrew Bailey, the Bank of England governor, declared at a press conference that the central bank wasn’t tapering. “It is not a tapering decision. We’re not doing open-ended QE — we’re doing fixed amounts — and we’re not changing the fixed amounts,” he said. By an 8-to-1 decision, the bank kept the government bond-purchase program target at £875 billion, with outgoing chief economist Andy Haldane voting to reduce the target by £50 billion.
The limited market moves showed the Bank of England was successful in getting traders to accept its explanation.
The FTSE 100 UKX, +0.52% didn’t react much to the decision, recently inching up 0.1%.
“Should they have sounded more hawkish?” asked Jennifer Lee, senior economist at BMO Capital Markets. “Probably. Did they? Not really.”