Bank of England expands daily bond purchase

The Bank of England on Tuesday decided to expand its daily bond purchase operations to include index-linked gilts in a bid to avoid a "fire sale."

"Dysfunction in this market, and the prospect of self-reinforcing ‘fire sale’ dynamics pose a material risk to UK financial stability," the bank said in a statement.

The move starting from Tuesday will be effective for four days, besides the bank’s existing daily conventional gilt purchase auctions, the statement said.

"These additional operations will act as a further backstop to restore orderly market conditions by temporarily absorbing selling of index-linked gilts in excess of market intermediation capacity," it added.

The bank will spend up to £5 billion ($5.5 billion) per day on inflation-linked government debt bonds.


It intervened in the bond market for the second time in two days as borrowing costs surged due to a sharp sell-off in government bonds.