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MNI BRIEF: Gilt Buying Immaterial For MonPol - BOE Cunliffe

(MNI) London
(MNI) London

BOE Deputy Governor highlights the scale of the financial stability risks created by sharp rises in long-dated gilts but says Bank gilt buying not relevant for monetary policy.

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The Bank of England's decision to start buying long-dated gilts came after it became aware of the sheer scale of the risks to financial stability as yields spiraled in the wake of the government's mini-Budget, Deputy Govenor Jon Cunliffe told the Treasury Select Committee in a letter published Thursday. In the letter, Cunliffe reiterated that the purchases would not be a material factor in monetary policy making.

Cunliffe said that the Bank's buying operations "are not intended to create central bank money on a lasting basis, nor are they designed to cap or control long-term interest rates ..They should not shift the underlying monetary trends in the economy .. and so they are not monetary policy operations."

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The Bank of England's decision to start buying long-dated gilts came after it became aware of the sheer scale of the risks to financial stability as yields spiraled in the wake of the government's mini-Budget, Deputy Govenor Jon Cunliffe told the Treasury Select Committee in a letter published Thursday. In the letter, Cunliffe reiterated that the purchases would not be a material factor in monetary policy making.

Cunliffe said that the Bank's buying operations "are not intended to create central bank money on a lasting basis, nor are they designed to cap or control long-term interest rates ..They should not shift the underlying monetary trends in the economy .. and so they are not monetary policy operations."