Bank of England confirms emergency intervention programme has ended

The Bank of England (BoE) has confirmed that it ended its temporary and targeted purchases of long-dated UK government bonds on Friday afternoon.

In a statement the BoE said that the programme helped pension funds which had used liability-driven investment (LDI) strategies (who came under stress when UK bond prices tumbled last month).

The BoE said: “At the outset of the intervention, the Bank said that it would carry out temporary purchases on whatever scale was necessary to restore orderly market conditions.”

“The purpose of the operations was to provide time for LDI funds to address risks to their resilience from volatility in the gilt market, not to provide a permanent backstop.”

“As previously announced, the Bank terminated these operations and ceased all bond purchases on Friday 14 October. As intended, these operations have enabled a significant increase in the resilience of the sector.”

The BoE also confirmed that liquidity is still available to banks through its new “Temporary Expanded Collateral Repo Facility.”

TECRF was created last week to help banks ease liquidity pressures facing their client funds caught up in the recent market turmoil which threatened pension funds.

There were fears amongst investors that the ending of this operation would cause further turmoil in the financial markets but the support provided by the BoE plus the changes to government fiscal policy announced in the past few days have so far provided some stability with bond yields falling on Monday.