The BOE detailed on Monday that it was doubling the size of its debt buy-backs by purchasing large sums of gilt-edged securities (bonds). Economics Inflation UK
on Monday. “The Bank is prepared to deploy this unused capacity to increase the maximum size of the remaining five auctions above the current level of up to £5 billion in each auction.” In addition to the long-term gilt purchases, BOE created a new repo facility in order to help with liquidity issues. The bank has dubbed the repo as the BOE’s “Temporary Expanded Collateral Repo Facility .”
“Under these operations, the [BOE] will accept collateral eligible under the Sterling Monetary Framework , including index-linked gilts, and also a wider range of collateral than normally eligible under the SMF, such as corporate bond collateral,” the central bank’s announcement details. The bank further said it was planning to open up a permanent, long-term repo operation as well, and it launched a short-term repo last week.
Meanwhile, the British pound sterling has seen some improvement against the U.S. dollar, but it is still down 0.13% during the past 24 hours and 2.56% during the last five days. Year-to-date statistics show the GBP has lost 18.23% against the U.S. dollar. The latest announcement stemming from the BOE showcases the central bank’s persistence toward intervening in financial markets “on whatever scale necessary” in order to “restore orderly market conditions.
Furthermore, amid the BOE’s latest decision to double gilt purchases, the U.K.’s finance minister Kwasi Kwarteng plans to release the medium-term fiscal plan three weeks before the scheduled date, according to His Majesty’s Treasury .
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