The Bank of England’s post-Brexit economic recovery plan got off to a stumbling start when it was unable to buy as many government #bonds as it needed from major City investors.
Threadneedle Street will spell out on Wednesday how it plans to get reluctant investors to part with government bonds – also known as gilts – in order to provide additional stimulus to the economy under its new £60bn quantitative easing (QE) programme.
The Bank enacts its electronic money-printing exercise – which was launched in March 2009 and was one element of a stimulus package to kickstart the economy announced last Thursday – by buying gilts.
One of the other key measures – a quarter-point cut in #interest rates to 0.25% – has also run into problems, with some high street banks unwilling to pass on fully cheaper borrowing costs to their customers.
The Bank offered on Tuesday to buy back £1.17bn of long-dated gilts – those with a maturity of 15 years or more – but received offers of only £1.11bn, leaving it with a shortfall of £52m. It is the first time since the Bank started buying back bonds that it has failed to attract enough sellers.