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MNI POLICY: Bailey Says Disorderly Markets Justified BOE Move

By David Robinson
     LONDON (MNI) - Bank of England Governor Andrew Bailey said borderline
disorderly financial markets, with sharp moves into cash and out of sterling and
into dollars, were behind the Monetary Policy Committee's decision to move early
and launch GBP200 billion of fresh quantitative easing.
     Bailey, speaking at a press conference, noted that gilt yields had been
extremely volatile and that markets were "bordering on disorderly."
     "It will be a while before we get hard economic data .. but we can't wait.
It will be too late .. The time to act is now," he said.
     The MPC did not give a split as to how much of the QE would be between
gilts and corporate bonds, with Bailey saying it was too uncertain. He stressed
that they were not setting a limit on QE, and noted that the inevitable increase
in government debt issuance would expand the market.
     "We will act in the market promptly" if necessary, Bailey said.
     He rejected the idea that the BOE would directly finance the deficit,
saying "We are not giving up on the philosophy of monetary financing."
     He also said he was not in favour of negative rates but that it would
foolish to rule anything out.
--MNI London Bureau; tel: +44 203-586-2223; email:
[TOPICS: M$B$$$,M$E$$$,MT$$$$,M$$BE$]

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