Bank of England Increases Bond Purchases to £10 Billion a Day Until October 14th

In a move to stabilize the UK financial market, the Bank of England (BoE) doubled its government bond purchases, increasing them from £5 billion to £10 billion a day until October 14th. This action aimed to ensure the bond-buying scheme concludes smoothly and to address concerns surrounding pension fund solvency.

The Bank of England's emergency bond purchases, initiated on September 28th, were designed to stabilize the market. The intervention came in response to a significant sell-off of long-dated UK government bonds (gilts) following the government's recent fiscal announcements.

Originally, the BoE had allocated up to £65 billion for these purchases. However, so far, the Bank has bought only around £5bn bonds in total under the programme. In its latest announcement, it said stood ready to increase the size of its daily First, the Bank will stand ready to increase the size of its daily auctions to ensure there is sufficient capacity for gilt purchases ahead of Friday 14 October. To date, the The central bank ultimately hoovered up £19.25 billion of securities in a little over two weeks.

The Bank of England stepped into Britain's bond market to stem a market rout, pledging to buy long-dated gilts after the new.

The BoE's intervention, characterized as temporary and targeted, reflects its commitment to its financial stability objective. This includes managing volatility in the gilt market and mitigating risks to the broader financial system. The plan included to increase the value of its long-dated bond purchases this week, with an auction of up to 10 billion pounds ($11 billion) a day. It will also make more cash.