UK monetary policy in an estimated DSGE model with financial frictions

•We employ a dual state DSGE model to study UK conventional and unconventional monetary policies.•QE is modeled as expanding the BoE’s purchases of bonds using M0 to reduce the credit spread at the ZLB.•While financial shocks are significant, it is the productivity shocks that had held back the recovery over 2009–2012.•Using a counteractive M0 rule in non-ZLB situations can enhance stability.