BoE ready to buy more gilts ahead of Friday deadline

The Bank of England said it was ready to increase the size of its daily purchases of government bonds to ensure sufficient capacity ahead of the end of its emergency programme to calm recent turmoil in the gilt market which is due to end on Friday.

It said the maximum size of each operation would be confirmed each morning and was set at up to 10 billion pounds ($11 billion) for Monday.

The central bank said last month that it would temporarily buy up to 5 billion pounds a day of gilts with a maturity of at least 20 years in a bid to calm surging yields following a government mini-budget that spooked investors.

So far, the BoE has bought far less than the minimum daily limit.

“To date, the bank has carried out 8 daily auctions, offering to buy up to 40 billion pounds, and has made around 5 billion pounds of bond purchases,” it said on Monday.

“As set out previously, all purchases will be unwound in a smooth and orderly fashion once risks to market functioning are judged to have subsided.”

The BoE also said on Monday it would launch a temporary expanded collateral repo facility to help banks ease liquidity pressures facing their client funds caught up in the turmoil which threatened pension funds.

The liquidity insurance operations would run beyond the end of this week, the bank said.

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