BoE extends emergency repo service
30 June 2016 London
Image: Shutterstock
Bank of England governor Mark Carney has pledged to continue the central bank鈥檚 additional weekly indexed long-term repo operations until the end of September in the wake of severe market turmoil caused by Brexit.
Speaking today in his second speech since the EU referendum result was announced on 24 June, Carney reassured the financial market that the Bank of England was well prepared to provide the additional liquidity to combat the severe market headwinds that struck even before the official result was announced.
Carney also reiterated that the bank stands ready to provide more than 拢250 billion of additional funds through its normal facilities and has raised over 拢130 billion of capital and now have more than 拢600 billion of high quality liquid assets.
The bank鈥檚 original plan involved offering three additional indexed long-term repo facility to its normal monthly service, the last of which had a settlement date of 30 June and a maturity date of 8 December.
Liquidity insurance via the central bank鈥檚 other facilities will continue as usual, including running a weekly US dollar repo operation.
Carney also went close to suggesting that a cut in interest rates is on the cards. The rate is already set at a lowly 0.5 percent, and had been pipped to be raised in the future as the UK battles with marginal economic growth.
Since Brexit, 鈥渢he economic outlook has deteriorated and some monetary policy easing will likely be required over the summer,鈥� Carney said.
Carney closed with a word of comfort and also a stark warning to the UK, stating: 鈥淥ver the coming weeks, the bank will consider a host of other measures and policies to promote monetary and financial stability.鈥�
鈥淚n short, the Bank of England has a plan to achieve our objectives, and by doing so support growth, jobs and wages during a time of considerable uncertainty.鈥�
鈥淧art of that plan is ruthless truth telling. And one uncomfortable truth is that there are limits to what the Bank of England can do.鈥�
Speaking today in his second speech since the EU referendum result was announced on 24 June, Carney reassured the financial market that the Bank of England was well prepared to provide the additional liquidity to combat the severe market headwinds that struck even before the official result was announced.
Carney also reiterated that the bank stands ready to provide more than 拢250 billion of additional funds through its normal facilities and has raised over 拢130 billion of capital and now have more than 拢600 billion of high quality liquid assets.
The bank鈥檚 original plan involved offering three additional indexed long-term repo facility to its normal monthly service, the last of which had a settlement date of 30 June and a maturity date of 8 December.
Liquidity insurance via the central bank鈥檚 other facilities will continue as usual, including running a weekly US dollar repo operation.
Carney also went close to suggesting that a cut in interest rates is on the cards. The rate is already set at a lowly 0.5 percent, and had been pipped to be raised in the future as the UK battles with marginal economic growth.
Since Brexit, 鈥渢he economic outlook has deteriorated and some monetary policy easing will likely be required over the summer,鈥� Carney said.
Carney closed with a word of comfort and also a stark warning to the UK, stating: 鈥淥ver the coming weeks, the bank will consider a host of other measures and policies to promote monetary and financial stability.鈥�
鈥淚n short, the Bank of England has a plan to achieve our objectives, and by doing so support growth, jobs and wages during a time of considerable uncertainty.鈥�
鈥淧art of that plan is ruthless truth telling. And one uncomfortable truth is that there are limits to what the Bank of England can do.鈥�
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