I think the Bank of England is largely clutching at straws here to justify paying interest on all reserves, which is going to have a large fiscal cost. So the BOE’s Money Market Committee think it's a bad idea. Of course they do. They're bankers!
this is a pattern I haven't seen before. As unemployment has trended lower, the BoE has revised up its unemployment forecast.
BoE won't accept interference over interest payments to banks - Pill
Big news: hearing from several sources in the UK that some pension funds are quickly becoming insolvent due to huge margin calls they can’t meet. The massive move in 30y UK swaps and bonds coupled with risk assets tanking behind the problem. That “explains” the BoE action.
Golly. Markets are now pricing in 5.5% interest rates from the @bankofengland next year. Up from 4.75% yesterday. Deutsche Bank saying BoE may need to table an emergency rate hike as soon as next week. Extraordinary. And, as I said yday, higher rates are a big, big deal. Ugh.