Whatever did they mean by that? Markets were reminded what a bona fide shock feels like yesterday when the Bank of England announced that it would buy another £50bn in long-dated gilts.
The measure, known as quantitative easing, is a drastic way to push down bond yields, and with them the long-term interest rates that prevail in the economy. The news was preceded by a debate between those who thought the bond purchases were over, and those who thought the Bank would buy another £25bn. Nobody expected another £50bn.
Hence sterling lost 2 cents against the dollar in seconds, while the yield on 10-year gilts dropped from 3.86 to 3.62 per cent. But the FTSE-100 stock index rose, and closed at a fresh high for the year.
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