– Kwarteng Greenlighted BOE £100 Billion Of Bond-Buying To Quell Market Mayhem:
Last week, the Bank of England intervened to prevent a gilt market crash by pledging to purchase long-dated bonds after the fallout from Prime Minister Liz Truss’s proposed tax cuts. As collateral calls mounted, forcing pension funds to scramble for cash from investment managers to meet margin calls, Bloomberg revealed that the central bank’s bond-buying program is much larger than previously announced.
Bloomberg reported Finance Minister Kwasi Kwarteng signed off on a £100 billion ($113 billion) bond-buying program for the BoE to soothe strains in the gilt market which has so far halted a sell-off that threatened to spiral out of control, sparking a liquidity crisis among pensions funds. Initially, the BoE pledged £65 billion ($69 billion) to buy long-dated gilts.
Kwarteng approved the purchase of long-dated gilts up to £100 billion, according to a letter from Kwarteng to Mel Stride, a member of Parliament who leads the Treasury Committee.
“The Bank has requested an extension to the maximum size of the APF by £100 billion to £966 billion,” the Chancellor wrote in a letter dated published on Friday. “There was a special urgency to incur this liability.”
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