Unfazed Bank of England to carry on with billion-pound bond purchases despite setback

 
Jake Cordell
Follow Jake
The Bank of England could not find enough willing sellers in yesterday's bond-buying operations
The Bank of England could not find enough willing sellers in yesterday's bond-buying operations (Source: Getty)

The Bank of England is pushing ahead with its bond-buying programme as planned despite yesterday's stumble.


Threadneedle Street was unable to find enough bond sellers on the open markets for its planned purchases yesterday, coming up £52m short of its target in a £1bn-plus operation. This morning the Bank confirmed it will continue with today's asset purchases, as scheduled, and attempt to snap up the missing bonds later this year.

A statement issued to markets said: "The Bank will incorporate the £52m shortfall from yesterday's uncovered operation within the second half of the current six-month purchase programme."

Today the Bank will attempt to buy another £1.17bn of government bonds as part of the £60bn extension to its quantitative easing programme announced last week. Once the purchases are completed in early 2017, the Bank will hold a total of £435bn in government debt.

Read more: Sterling slips on prospect of Bank of England stimulus


A similar round of buying on Monday went ahead without any hiccups, although strong supply may have spooked the markets and caused some investors to hold back before agreeing to hand over their bonds to the central bank just yet.

In a huge stimulus package unveiled last week, governor Mark Carney also revealed the Bank will buy £10bn of corporate bonds between now and early 2018.

UK bond yields have fallen to new record lows after the Bank's announcement last week. The 10-year bond currently returns just 0.54 per cent, down four basis points from yesterday, while the 2-year bond edged closer towards negative territory, falling from 0.09 per cent to 0.07 per cent.

Related articles