Belfast Telegraph

UK Website Of The Year

Bank's £60bn QE plan 'back on track'

Published 16/08/2016

The Bank of England announced another £60 billion of QE earlier this month
The Bank of England announced another £60 billion of QE earlier this month

The Bank of England's £60 billion economy-boosting plan was back on track after last week's stumbling block as investors rushed to sell government bonds.

The Bank snapped up £1.17 billion of so-called gilts as part of its new quantitative easing (QE) programme to help cushion the blow of the Brexit vote.

It received offers from investors worth £3.12 billion - 2.67 times the amount it wanted to buy - calming fears over the programme after it last week failed to buy enough gilts to meet its target for the first time since launching QE in 2009.

The Bank's £52 million QE shortfall last Tuesday sparked a rally in global bond markets that left yields - or returns - in the UK and Europe at record lows. Yields fall when bond prices rise.

It said it would carry on with its gilt-buying programme as planned for the next three months, but would look to catch up on the shortfall from November.

But investors have since queued up to sell gilts as they look to take advantage of the sharply higher bond prices.

The Bank also hit its target in its third tranche of gilt buying last week, when it received far more offers than needed on Wednesday, at £5.5 billion, with the bank buying £1.17 billion of government bonds.

Policymakers announced another £60 billion of QE earlier this month as part of an economy-boosting package as it cut rates for the first time in more than seven years, to 0.25% from 0.5%.

Read More

From Belfast Telegraph