The Bank of England

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   The Bank of England said on Thursday it will start its 50 billion pound shopping spree to get credit markets moving again with purchases of corporate bonds, commercial paper and debt issued by banks that were recapitalised by the government.
But policymakers are holding off for now from using the asset-buying facility to give the economy a boost by increasing the money supply, saying only that they would keep that option under review.
Chancellor Alistair Darling sanctioned the asset-buying scheme last week in order to get lending flowing as Britain is now in its first recession since the early 1990s because companies and consumers are being starved of credit.
In a letter to Darling on Thursday Bank Governor Mervyn King said precise details on how the central bank would make its purchases, which will be financed by the issue of government bills, will be set out next week.
But he revealed that the Bank would first focus on purchases of corporate bonds, commercial paper, and paper issued under the Credit Guarantee Scheme for the recapitalised banks.
"I hope that by offering to purchase assets on a regular and ongoing basis the facility should help to improve market liquidity," King said.
The Bank would also consult with market participants, he said, about plans to buy syndicated loans and asset-backed securities.
"I expect the amount of assets purchased to increase gradually in the early stages of the facility. This will provide scope to assess the impact of those operations on market liquidity," King said.
A new company would be established to undertake the asset-buying and the Bank will publish a quarterly statement shortly after the end of each quarter.
King said that the Bank would unwind the assets it takes on when market conditions return to normal either through the securities reaching maturity or through sales.
CREDIT EASING
Darling also gave the Bank powers last week to buy high quality assets for monetary policy purposes because the central bank is running out of room to cut interest rates much further given they are already at a record low of 1.5 percent.
King said last week thinking about such unconventional ways to boost the economy was sensible but that policymakers had not reached that point yet.
In his letter on Thursday he said the Monetary Policy Committee would keep under review whether it wants to buy assets in order to boost the money supply thereby supporting the economy.
"If the Committee were to conclude that this would be a useful additional tool for meeting the inflation target I would inform you so that you could authorise the changes to the scale and operation of the facility that might be required," he said.
"I note that in such circumstances a further exchange of letters would take place setting out the new arrangements.

Edited by Keymaster - 29 Jan 2009 at 16:13

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Keymaster Members Profile Find Members Posts Forum Regular Joined: 27 Sep 2008 Online Status: Offline Posts: 291	Quote Reply Topic: The Bank of England Posted: 29 Jan 2009 at 16:10
	The Bank of England said on Thursday it will start its 50 billion pound shopping spree to get credit markets moving again with purchases of corporate bonds, commercial paper and debt issued by banks that were recapitalised by the government. But policymakers are holding off for now from using the asset-buying facility to give the economy a boost by increasing the money supply, saying only that they would keep that option under review. Chancellor Alistair Darling sanctioned the asset-buying scheme last week in order to get lending flowing as Britain is now in its first recession since the early 1990s because companies and consumers are being starved of credit. In a letter to Darling on Thursday Bank Governor Mervyn King said precise details on how the central bank would make its purchases, which will be financed by the issue of government bills, will be set out next week. But he revealed that the Bank would first focus on purchases of corporate bonds, commercial paper, and paper issued under the Credit Guarantee Scheme for the recapitalised banks. "I hope that by offering to purchase assets on a regular and ongoing basis the facility should help to improve market liquidity," King said. The Bank would also consult with market participants, he said, about plans to buy syndicated loans and asset-backed securities. "I expect the amount of assets purchased to increase gradually in the early stages of the facility. This will provide scope to assess the impact of those operations on market liquidity," King said. A new company would be established to undertake the asset-buying and the Bank will publish a quarterly statement shortly after the end of each quarter. King said that the Bank would unwind the assets it takes on when market conditions return to normal either through the securities reaching maturity or through sales. CREDIT EASING Darling also gave the Bank powers last week to buy high quality assets for monetary policy purposes because the central bank is running out of room to cut interest rates much further given they are already at a record low of 1.5 percent. King said last week thinking about such unconventional ways to boost the economy was sensible but that policymakers had not reached that point yet. In his letter on Thursday he said the Monetary Policy Committee would keep under review whether it wants to buy assets in order to boost the money supply thereby supporting the economy. "If the Committee were to conclude that this would be a useful additional tool for meeting the inflation target I would inform you so that you could authorise the changes to the scale and operation of the facility that might be required," he said. "I note that in such circumstances a further exchange of letters would take place setting out the new arrangements. Edited by Keymaster - 29 Jan 2009 at 16:13

johns Members Profile Find Members Posts Admin Group Joined: 21 Apr 2008 Online Status: Offline Posts: 133	Quote Reply Posted: 07 Feb 2009 at 14:50
	The Bank of England said it would launch a scheme to purchase commercial paper issued by British companies on February 13, unveiling the first concrete details of its Asset Purchase Scheme to tackle gummed-up credit markets. The Bank said on Friday it would buy investment grade sterling paper both at issue and in the secondary market, to help channel funds directly to the corporate sector and make it easier for companies to borrow on capital markets. Short sterling futures jumped on the news, with the March contract up 5 ticks into positive territory as markets priced in cheaper interbank lending rates. "It's one of the first measures we've seen during the crisis which in essence bypasses the banks (and) allows corporates to borrow directly from the Bank of England," said Jonathan Loynes, chief European economist at Capital Economics. "So in that sense you could possibly see it as a first admission that banks are not going to get back to normal conditions in the foreseeable future." The Bank said it wanted to introduce a similar scheme for British corporate bonds as soon as possible, and was currently consulting dealers -- with the likeliest option being for the Bank to buy a "modest" quantity of bonds to facilitate market-making. "The Bank will keep under review whether there is a case for proposing to the Chancellor (Alistair Darling) that the list of eligible assets or currencies could usefully be expanded," the Bank said in the statement. The Bank's asset purchase scheme was announced last month, and the British government has initially put 50 billion pounds at the Bank's disposal to purchase high-quality private-sector assets.

basil Members Profile Find Members Posts Forum Regular Joined: 28 Apr 2008 Online Status: Offline Posts: 322	Quote Reply Posted: 11 Feb 2009 at 11:36
	The governor of the Bank of England, Mervyn King, has warned that the UK is facing a deep recession in 2009 and said further action may be necessary. In its latest forecast for economic growth and inflation, the Bank says that the UK economy will decline sharply in the first half of the year. And it says that there is a significant risk that the recession will be even longer and deeper than expected. The length and depth of the recession will be dependent on the world economy. Mr King pointed out that since the Bank's last forecast, a severe economic downturn had taken hold around the world. "Growth in the advanced and emerging market economies fell sharply towards the end of last year. And world trade is contracting rapidly," he said. The slowdown could be deeper if "the authorities at home and abroad are only partially successful in improving the availability of credit and restoring business and consumer confidence". The Bank also said that inflation would remain below its 2% target by the end of its two-year forecast period. Policy options The Bank of England has already cut interest rates from 5% to 1% in the last five months in a bid to stimulate the economy - and made it clear the Bank was ready to consider more unconventional measures. Mr King said that the "Monetary Policy Committee can and will take action to return inflation to the target and so ensure that economic growth will again match its potential". He indicated that as well as interest rate cuts, the Bank was ready to use a wider group of policy measures to increase the money supply, thus easing conditions in the economy, including buying a new £50bn facility to buy up distressed corporate assets. He added that other central banks were taking similar actions and that the common approach would help see the world through the crisis.

Blaze159 Members Profile Find Members Posts Forum Regular Joined: 27 Apr 2008 Online Status: Offline Posts: 448	Quote Reply Posted: 11 Feb 2009 at 20:06
	The governor of the Bank of England, Mervyn King, has warned that the UK is "in a deep recession" in 2009 and said rate cuts may no longer work. In its latest forecast for economic growth and inflation, the Bank says that the UK economy will decline sharply in the first half of the year. And it says that there is a significant risk that the recession will be even longer and deeper than expected. The Bank forecasts the economy will shrink by 4% from mid-2008 to mid-2009.

johns Members Profile Find Members Posts Admin Group Joined: 21 Apr 2008 Online Status: Offline Posts: 133	Quote Reply Posted: 18 Feb 2009 at 23:01
	The Bank of England is seeking approval from the government for a series of measures aimed at increasing the supply of money in the economy. Technically known as quantitative easing, the aim of the process is to try to increase the amount of funds in the UK banking system. The hope is that this will make it easier for the commercial banks to start to increase their lending levels. Analysts said the Bank could start to introduce measures within days.

Blaze159 Members Profile Find Members Posts Forum Regular Joined: 27 Apr 2008 Online Status: Offline Posts: 448	Quote Reply Posted: 04 Mar 2009 at 16:14
	Savers would face another "savage hit" if the Bank of England cut interest rates again on Thursday, the Building Societies Association (BSA) has warned. The BSA, which represents 55 building societies in the UK, added that a Bank rate cut would restrict new lending to the depressed mortgage market. The Bank rate has fallen five times since October, is now at 1% and is predicted to fall further. The cuts were made to try to boost the shrinking economy. Following last month's 0.5 percentage point reduction, the Bank of England said that the rate cuts, along with government measures to boost the economy, "would provide a considerable stimulus to activity as the year progressed".

CloudRunner Members Profile Find Members Posts Forum Junkie Joined: 28 Oct 2008 Online Status: Offline Posts: 701	Quote Reply Posted: 04 Mar 2009 at 17:56
	Alot of things i understand at my age, But this, i do not get.
	The one who you see running on the clouds...

Blaze159 Members Profile Find Members Posts Forum Regular Joined: 27 Apr 2008 Online Status: Offline Posts: 448	Quote Reply Posted: 04 Mar 2009 at 18:00
	lol, so you know alot? but yeah, i dont understand it ither.