BoE begins corporate debt purchases
THE Bank of England has begun buying £10 billion (US$13 billion) of corporate debt under a wideranging stimulus program aimed at propping up the economy after Britain voted to exit the EU.
The BoE last month announced it would buy company bonds worth the equivalent of $13 billion over an 18-month period.
It came as the BoE slashed its key interest rate by a quarter point to a record-low 0.25 percent and expanded its main quantitative easing (QE) bond-buying scheme by £60 billion to £435 billion.
At the same time, it unveiled in August a scheme worth up to £100 billion to encourage banks to lend to households and businesses.
The BoE is meanwhile purchasing debt from non-financial companies which make a “material contribution” to Britain’s economy, while foreign firms such as Apple, German rail operator Deutsche Bahn and French oil giant Total are eligible to participate in the scheme.
Britain voted June 23 to quit the European Union under the so-called Brexit referendum, causing BoE governor Mark Carney to believe that the country could fall into recession.
Economic data since the vote has been mixed, while markets await upcoming releases for a clearer idea of what the future holds.
Meanwhile, the prospect of a “hard Brexit”, or a total divorce between Britain and the European Union, is on the rise, posing complications for businesses. –