BOE Gets 2.42 Cover At Over 25 Year Gilt Auction
LONDON (MNI) – Cover at the Bank of England’s over 25 year reverse
gilt auctions came in at a robust 2.42 compared to 1.83 at last week’s
over 25 auction.
Cover at the shorter dated maturities remains strong, but has
drifted lower at the BOE has pressed ahead with its current round of
Stg75 billion of quantitative easing. On Monday, the central bank saw
cover of 2.32 at its 3 to 10 year auction.
BOE officials believe they could well run into difficulties
covering their gilt auctions if they were to step up the pace of QE.
Executive Director Markets Paul Fisher, in evidence to the Treasury
Select Committee on Nov 28, said of the current “run rate” for gilt
purchases “The markets at the moment are not functioning fully,
generally across a whole range of asset markets, so I think we are going
about the right rate.”
“We could go faster … The faster we go the more risk is that some
of our operations don’t quite deliver the amount of gilts we want to
purchase,” he added.
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