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MNI BRIEF: Latest Long Bond Buys Not MonPol Move - BOE Pill

(MNI) London
(MNI) London

BOE Chief Economist Huw Pill says the intervention by the Bank on Wednesday was to avoid contagion; significant monetary policy response in Nov

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The Bank of England's decision to buy long dated gilts, unveiled Wednesday, is not a form of yield curve control or a relaunch of quantitative easing but instead a temporary move designed only to avoid contagion and dysfunction at the long-end of the gilt market, Chief Economist Huw Pill said Thursday.

Long dated gilt prices had surged following the fiscal easing in the mini-Budget with margin calls lead to spiraling price rises before the BOE stepped in. Pill said that the "Bank is preventing a self-sustaining vicious spiral of collateral calls, forced sales and disappearing liquidity from emerging in a core segment of the financial markets" but that this was purely for financial stability reasons.

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The Bank of England's decision to buy long dated gilts, unveiled Wednesday, is not a form of yield curve control or a relaunch of quantitative easing but instead a temporary move designed only to avoid contagion and dysfunction at the long-end of the gilt market, Chief Economist Huw Pill said Thursday.

Long dated gilt prices had surged following the fiscal easing in the mini-Budget with margin calls lead to spiraling price rises before the BOE stepped in. Pill said that the "Bank is preventing a self-sustaining vicious spiral of collateral calls, forced sales and disappearing liquidity from emerging in a core segment of the financial markets" but that this was purely for financial stability reasons.

Keep reading...Show less