Bond-buying programme will end on Friday, insists Bank of England
The Bank of England has insisted it is ending its emergency bond-buying programme on Friday as planned, countering claims it was considering an extension, and expects pension funds to raise extra cash in time protect against future shocks.
A £65bn intervention by the Bank has failed to quell turmoil on the bond markets, with the value at which government debt trades continuing to fall.
However, in a statement released on Wednesday morning, after a scheduled update on monetary policy, officials said: “As the bank has made clear from the outset, its temporary and targeted purchase of gilts will end on 14 October. The governor confirmed this position yesterday, and it has been made absolutely clear in contact with the banks at senior levels.”
Overnight, the Financial Times reported the central bank was in contact with commercial lenders to signal they were ready to extend the scheme as necessary. The Bank’s latest statement appears to contradict those reports.
The decision to close the scheme is meant to put pressure on pension funds to raise tens of billions of pounds to build up cash buffers, and ensure they are protected against future shocks in the value of government bonds after the Bank withdraws its support.
However, it is understood the Bank expects demand to increase towards the end of the week as pension funds caught out by recent market turmoil rebalance their portfolios.
Releasing the minutes of its regular financial policy committee meeting, the Bank said investors needed to “put their funds on a sustainable footing, for whatever level of asset crisis prevail when the Bank ceased purchasing gilts”.
Gilt yields continued to rise on Wednesday towards levels last seen before the Bank was forced to intervene on the 28
Read more on theguardian.com
