BoE be­gins cor­po­rate debt pur­chases

The Myanmar Times - - International Business -

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. –

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