July 14, 2020
AliExpress WW
Bank of England adds another £ 100 billion to bond purchase program to combat coronavirus slowdown

Bank of England adds another £ 100 billion to bond purchase program to combat coronavirus slowdown

AliExpress WW

Pedestrians follow the Bank of England in the city of London, Britain on June 28, 2016.

AliExpress WW

Paul Hackett | Getty images

The Bank of England on Thursday added another 100 billion pounds to its quantitative easing program in an attempt to support the US economy in a crisis after the coronavirus crisis.

Additional bond purchases will increase the Central Bank’s total asset acquisition (APF) value to £ 745 billion.

The bank refused to accept interest rates on negative territory, and investors are closely following this decision; instead, he preferred to keep his basic interest rate at 0.1%. Since the onset of the coronavirus pandemic, the incidence rate has halved from 0.75%.

Soon after the decision was announced, the pound fell by about 0.1% against the dollar, which was in line with analysts’ expectations. Yields on 10-year-old Gilt in the US fell briefly to a month low of 0.16%, but recovered to just above 0.2%.

The latest monetary policy decision by the Bank of England was made when the UK economy tries to recover from an unprecedented 25% decline in March and April as a result of the blockages caused by a pandemic that undermined economic activity.

While economic data suggests that the worst of the consequences can be overcome, the Bank of England will also have to take into account the possible curtailment of the British government’s vacation program, which subsidizes 80% of the salaries of workers laid off as a result of the pandemic.

Economists had expected the central bank to expand its bond purchase program. James Smith, an ING market economist, said earlier this week that asset purchases were £ 598 billion at last count, suggesting that the initial £ 645 billion target set in March could be exhausted by July.

Smith suggested that an additional £ 100 billion would allow BOE to continue procurement until early September, which would mean that MPC would have to top up in August.

According to Johns Hopkins University, the UK remains the fifth country to be hit by a pandemic in the world, with more than 300,700 confirmed cases and more than 42,200 deaths on Thursday morning.

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