UK Central Bank Moves To Calm Capital Market

The Bank of England has moved to ease concerns about the expiry at the end of this week of its emergency programme to calm turmoil in the government bond market, including a doubling of the maximum size of its planned debt buy-back.

After finance minister Kwasi Kwarteng alarmed investors with a string of unfunded tax cuts last month, the central bank said on September 28 that it would temporarily buy up to 5 billion pounds ($5.5bn) a day of gilts with a maturity of at least 20 years.

So far, the BoE has bought far less than the minimum daily limit, but on Monday it said it was taking steps to ensure the scheme concludes smoothly.

“In the final week of operations, the Bank is announcing additional measures to support an orderly end of its purchase scheme,” it said in a statement.

The BoE has so far offered to buy up to 40 billion pounds ($44.2bn) worth of gilts but has only bought about 5 billion pounds ($5.5bn).

“The Bank is prepared to deploy this unused capacity to increase the maximum size of the remaining five auctions above the current level of up to 5 billion pounds in each auction,” the statement said.

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