First with news Bank of England to print money, gilts surge
03.03.2009
Reuters put clients ahead with news on March 3 that the UK finance ministry planned to give the green light for the Bank of England to start a policy of quantitative easing to kickstart moribund lending, just in time for the BoEs monthly policy meeting. Bank of England Governor Mervyn King had written to finance minister Alistair Darling to ask for permission to boost the money supply by buying up banks assets with newly created central bank funds — a prospect that has supported gilt prices for weeks. A source familiar with the letter Darling was writing in response told Reuters that the correspondence would be published on Thursday, and that Darling would give the all clear but leave it up to the Bank of England when to start. The Treasury subsequently officially confirmed to Reuters that the letter was set to be published on Thursday. No competitors appeared to match the news, which was referred to in research notes by banks such as JP Morgan the following day. UK gilts have surged since the QE decision became official.
