Bank of England's Brexit plan to prop up the economy with QE fails on second day

Central bank £52m short of target to buy £1 billion in long-dated government debt

The Bank of England plan to boost the economy with quantitative easing after Brexit has ran into trouble on its second day after it failed to find enough sellers of bonds.

The central bank was £52 million short of its target to buy £1 billion in long-dated government debt, pushing bond yields to record lows.

Pension funds and insurance companies were behind the missed target as they hung on to Government bonds, or gilts, which are seen as a safe haven asset in times of economic uncertainty.

Ros Altmann, the former pensions minister, said that low yields forces pension funds to hold more debt.

"It's a vicious circle," Baroness Altmann told the BBC.

"The lower gilt yields go the bigger pension deficits become, and that leads to them being told that they need to cut risks and told to increase the long term bonds that they hold."

The bond buying programme was announced by the Bank of England as part of a bumper package of stimulus measures amid grim predictions for the UK economy after the result of the EU referendum.

The central bank forecasted that the UK economy would return to a recession for the first time since the financial crisis unless it took drastic measures.

Even after cutting interest rates to records lows of 0.25 per cent and billions in stimulus, economic growth is expected to slump to just 0.1 per cent in the third and fourth quarters of the year.

Investors rushed to sell 3-7 government bonds to the Bank of England on Monday as gains in that part of the curve are already limited because of yields close to zero.

Darren Bustin, head of derivatives at Royal London Asset Management, said that the government may need to look at fiscal policies such as cutting VAT to prop up the economy if monetary stimulus fails.

"As quantitive easing was meant to have been a solution for the problems facing the British economy following Brexit, if this trend continues and monetary policy is unable to achieve its goals then the baton may have to be passed to the Treasury to find a solution," he said.

The bond-buying programme will continue on Wednesday, the Bank of England said, despite the stumbling block.

"The Bank will incorporate the £52 million shortfall from yesterday’s uncovered operation within the second half of the current six-month purchase programme.

"As set out in the Market Notice of 4 August 2016, details of these purchases will be announced on 3 November 2016," it said in a statement.

http://www.independent.co.uk/news/business/news/brexit-bank-of-england-qe-bonds-gilts-pensions-mark-carney-interest-rates-vat-a7182256.html



Bloody wonderful! Not

Wait about.....hmmmm.....two, three days? Sooner?

Different article, opposite message.

It's the same message, they are trying to stop a recession with quantative easing.

We had a huge recession in 2008 - 2013.
Bugger all to do with BREXIT.

eddie wrote:We had a huge recession in 2008 - 2013.
Bugger all to do with BREXIT.

And?   The recession in 2008 was because of banks overlending to people who they knew could not pay it back and breaking Libor standards etc.   Now the Bank of England are trying to stop another one caused by Brexit with quantative easing.

sassy wrote:

eddie wrote:We had a huge recession in 2008 - 2013.
Bugger all to do with BREXIT.

And?   The recession in 2008 was because of banks overlending to people who they knew could not pay it back and breaking Libor standards etc.   Now the Bank of England are trying to stop another one caused by Brexit with quantative easing.

Sassy you are so blinded by politics sometimes.

eddie wrote:

sassy wrote:

And?   The recession in 2008 was because of banks overlending to people who they knew could not pay it back and breaking Libor standards etc.   Now the Bank of England are trying to stop another one caused by Brexit with quantative easing.

Sassy you are so blinded by politics sometimes.

Eddie, this has fuck all to do with politics, it's Finance, I was a finance manager and director and those are the facts. Financial decisions are not taken because of politics, expecially by the Bank of England.

It's all bloody politics. Jeez.

No Eddie, it's finance.

Yes sassy. Strip it all away its about politics strip that all away and it's about greed.
Everything is about greed.

you do realise dont you eddie. that everything negative about global financial doings will be down to brexit....for the next 50 years

and yet......the ftse 100, 250 AND 350 are ALL at levels not seen since the beginning of 2015 and still heading upward.....

eddie wrote:Yes sassy. Strip it all away its about politics strip that all away and it's about greed.
Everything is about greed.

Yea, so the Bank of England trying to stop us going under is all about greed. Have to say Eddie, you don't seem to understand the role of the Bank of England or finance.

sassy wrote:

eddie wrote:Yes sassy. Strip it all away its about politics strip that all away and it's about greed.
Everything is about greed.

Yea, so the Bank of England trying to stop us going under is all about greed.   Have to say Eddie, you don't seem to understand the role of the Bank of England or finance.

What's there to understand sassy? Whatever it is you think you know can change whenever the whim takes them.

If you think you understand what's going on in the higher workings of finance, you're a bit deluded.

The Bank of England tries to steady the economy against whatever forces are causing it to rise too quickly or fall too quickly. That's why it sets the interest rates to try to steady inflation and deflation. It is the best took to keep money markets on a safe footing.

Sassy... you know fuck all about economics!!!