LONDON (MNI) – The Bank of England saw the cover ratio at its
stg1 billion three to seven year reverse gilt auction Monday fall to
2.49 from 2.72 in the corresponding auction a week ago.
In the latest tranche of stg50 billion of quantitative easing the
average cover ratio for three to seven year auctions has been 2.6, with
the high of 3.69 in the first auction of this tranch, back on July 9.
The low of 1.94 was seen back on September 10.
There had been a trend up in cover ratios in recent auctions, with
doubts over whether the BOE’s Monetary Policy Committee will vote to
extend quantitative easing at its November meeting. Many analysts still
expect a QE extension, but it is seen as a close call.
In total, the BOE’s Monetary Policy Committee has sanctioned stg375
billion of asset buying under its QE scheme. As at the close of business
Thursday the BOE had made stg368.807 billion of purchases and, following
today’s auction, it has to complete only stg5.193 billion of purchases
to hit the target.
As the BOE is currently purchasing stg3 billion of gilts a week in
three weekly auctions, and all auctions have been fully covered, this
tranche of QE is set to come to an end in the October 31 auction.
This entails there will be no auctions in the week starting
November 5 ahead of the MPC’s November 7 and 8 policy meeting.
Under the BOE’s current programme gilts with a residual maturity of
3-7 years are being purchased on Mondays, over 15 years on Tuesdays and
7-15 years on Wednesdays.
-London newsroom 0044 20 7862 7491; email: drobinson@marketnews.com
[TOPICS: M$$BE$]
