In a major policy change, the Mark Carney-led Bank of England lifts from the Fed playbook - adopting explicit forward guidance as it says it will keep its benchmark rate at 0.5% until the unemployment rate drops below 7% (currently 7.8%). The bank says it doesn't expect this to happen until at least 2016. Like Bernanke, Carney is quick to mention 7% is a threshold, not a trigger - meaning rate hikes are not automatic should unemployment drop below that.
Copycatting another Fed line, the bank says it stands ready to boost QE (currently dormant) if necessary.
"We are not at escape velocity," says Carney.
Meanwhile, traders - who sold cable expecting Carney to immediately boost stimulus upon his arrival at the BOE - continue to cover their shorts. FXB +0.8% today with the pound now buying $1.5475, up from about $1.49 on July 1. Related ETF: GBB.
By a wide margin, the FTSE 100 is the worst performer across the pond today, off 1%. Related ETF: EWU.