Today the Bank of England, just a few days before it was supposed to start running off the assets it had accumulated as part of the quantitative easing program, announced that it would buy unlimited amounts of UK sovereign bonds (gilts) to support market functioning. Here is the statement:
“In line with its financial stability objective, the Bank of England stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses.
To achieve this, the Bank will carry out temporary purchases of long-dated UK government bonds from 28 September. The purpose of these purchases will be to restore orderly market conditions. The purchases will be carried out on whatever scale is necessary to effect this outcome. The operation will be fully indemnified by HM Treasury.”
The full note on this important topic can be downloaded at this link: LTA Thinking – The Bank of England Pivoted and the Fed is Next