Expert Chaslau Koniukh
  • Companies
  • Global investment
  • Investors
  • Terminology
  • Economy
  • Stock Market
  • World exchanges
  • Tech and Marketing
Bank of England
Stock Market

Bank of England announced the purchase of government bonds

24.11.2022
2 min read

Bank of England plans to buy government bonds to stimulate the economy

One of the key problems for the economies of different countries has been the rise in inflation. Even in countries with developed markets, its level has reached record levels and continues to go up. In order to slow down the dynamics, regulators introduce various measures – some of them demonstrate effectiveness, while others have a negative impact on the processes in the economy. The Bank of England is also actively fighting the growth of inflation. Introduced measures contributed to an increase in government bond yields, and now the regulator said it plans to buy them. The Central Bank notes that such changes will be temporary.
Since the beginning of the year the yield on the Kingdom’s 30-year bonds has been rising steadily, the dynamics of the increase were stimulated by rising inflation in the country and in the global market. This process was quite natural, given that the regulator had raised the key rate several times. In addition, in October the bank was planning to sell government bonds, which were on its balance sheet since the pandemic. At that time, the regulator was buying securities to strengthen the economy. However, such a decision could bring a negative result and increase the dynamics of inflation growth.Bank of England will buy back EurobondsThe bank’s management had to reconsider its plans when the yield on bonds exceeded the 5% mark. Analysts believe that such a situation could put pressure on the financial stability of the country. Therefore, it was decided to resort to the purchase of government bonds. Moreover, the purchase will be conducted without limitation on the number of securities, the main goal is to obtain the necessary effect and slow the growth of inflation. In this case, the purchases of bonds will be carried out over one month.
An increase in bond yield is perceived with the same apprehension as a decrease in their cost. Moreover, the pound is weakening against the dollar, the British currency has already reached its historical minimum of 1.035 to 1 dollar. One of the reasons for such negative changes was the market reaction after the government published a new plan to support the economy. The key point of the document is to reduce the amount of taxes. Experts estimated that in case of tax cuts the budget of Great Britain may lose about 45 billion pounds annually. In addition, the authorities announced a program to subsidize electricity prices, to maintain it for 2 years requires 150 billion pounds.
According to analysts, such innovations will not improve the economic situation; on the contrary, they will lead to an increase in debt, which will be difficult to pay back. Accordingly, the national currency will weaken further, which will lead to serious problems. Investors’ fears have already been reflected in the stock markets, but the government has not yet presented another way out of the crisis.

Tags: Stock Market
0
Previous Post What will happen to the S&P 500 index in the next 12 months: analysts' forecast Next Post How live shopping is changing the way we approach promotion

You Might Also Like

Deposit rates in Russia
Stock Market
Deposit rates in Russia are losing their relevance as an option to generate income
21.05.2020
Goldman Sachs oil price forecast
Stock Market
Goldman Sachs has published a new oil price forecast
01.07.2025
Steelmaker Posco Holdings
Stock Market
Steelmaker Posco Holdings reports lower profits
03.05.2023
UniCredit bank
Stock Market
Italian bank UniCredit completed the procedure of share buyback
20.02.2023
chinese state companies
Stock Market
Chinese state companies bought Shengjing Bank shares from Evergrande
22.10.2022
sberbank
Stock Market
Sberbank will not sell complex investment products to inexperienced investors
15.09.2021

Popular Posts

  • Field of activity of the American Monsanto Company Corporation
  • Spain’s economy performs best in the EU
  • Li Ka Shing: How can success be achieved without money and education?
  • Skolkovo analysts: the Russian energy market is suffering losses

Editor's Picks

Chaslau Koniukh
Analytics

American bankers from JPMorgan and Goldman Sachs advise to invest in gold: review by Chaslau Koniukh.

Press Secretary
17.08.2020
Expert Chaslau Koniukh
Analytics

Chaslau Koniukh on the analysts’ opinion on the key stake size change soon

Press Secretary
18.06.2020
expert Chaslau Koniukh
Analytics

Chaslau Koniukh: Internet trade market in Russia may reach 2.78 trillion rubles.

Press Secretary
30.05.2020
Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh
Analytics

Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh

Press Secretary
16.05.2020

Popular Posts

  • Field of activity of the American Monsanto Company Corporation
  • Spain’s economy performs best in the EU
  • Li Ka Shing: How can success be achieved without money and education?
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Ingeborg Mootz: a woman who became a stock player at the age of 75
Expert Chaslau Koniukh
  • Facebook
  • Twitter
  • Instagram

© 2024 CHASLAU KONIUKH. ALL RIGHTS RESERVED. Expert in marketing and project management, international investments, financial analyst.

Menu

  • Biography
  • Companies and corporations
  • Global investment
  • Investors and Entrepreneurs
  • Economy
  • Market terminology
  • Stock Market
  • World exchanges
  • Tech and Marketing
  • Analytics