Schroders Group CIO on Diversification and US Exceptionalism
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
26 minutes ago
- Bloomberg
Nina Trentmann, CFO Briefing
Bloomberg Markets: The Close CFOs are actually saying, yes, of course. Nina Trentmann talks on Bloomberg "The Close". (Source: Bloomberg)
Bloomberg
30 minutes ago
- Bloomberg
Do Know What's in the GOP's Tax Bill?
Only 48% of Americans have heard anything about the so-called "Big Beautiful Bill." Bloomberg Opinion columnist Sarah Green Carmichael wonders if you'll it. (Source: Bloomberg)
Yahoo
31 minutes ago
- Yahoo
Bank of England's Bailey defends bond programme after Reform UK criticism
By William Schomberg LONDON (Reuters) -Bank of England Governor Andrew Bailey defended the central bank's programme of government bond purchases and sales which has come under fire from some politicians for its cost. In a letter to Richard Tice, deputy leader of the Reform UK party which is led by former Brexit campaigner Nigel Farage, Bailey said claims that the programme was more expensive than those run by other central banks did not tell the full story. Britain's government issued more long-term debt than other countries at a time when the BoE's bond-buying - or quantitative easing - was keeping borrowing costs low, giving the country a longer-lasting benefit, Bailey said. "Put simply, the cash flow cost of QE/QT is not therefore what it seems, and the outcome in these terms will be better," he said in the letter published on Monday. Reform - which is leading Britain's more established political parties in opinion polls - has said the government could save as much as 40 billion pounds ($53.6 billion) a year by stopping payment of interest to banks on reserves held at the BoE. Most of those reserves were created as a byproduct of the central bank's bond purchases which began in 2009 and reached a peak of almost 900 billion pounds in holdings in 2021. Since then, the BoE has sold much of its bond portfolio - known as quantitative tightening - and the programme is due to incur losses for the public finances because of a rise in interest rates and a subsequent fall in the value of the bonds. In his letter, Bailey said the bond purchases shielded Britain's economy from a string of economic shocks over the past 16 years. "It is easy to forget the severe problems we faced with these shocks," he said. "Although the counterfactual is unknowable with any precision, most estimates indicate that QE provided very significant support to the UK economy, protecting both jobs and tax revenues." Bailey said that ceasing paying interest on reserves was tantamount to increasing taxes on banks and would lead to lower interest payments for savers or higher interest rates for borrowers. He also disputed Reform's view that British banks were making excess profits. "Interest paid on reserves is not free money for the banks, not least as most of it is paid on to customers in the form of interest on their deposits," Bailey said. (Writing by William Schomberg; editing by David Milliken) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
