4th Nov 2023 13:31
(Alliance News) - The UK Treasury will pay over GBP170 billion to the Bank of England over the next decade due to quantitative easing-related costs, The Times reported on Friday.
The Bank of England made losses on its bond-buying scheme. Back when interest rates were lower, it had made a cumulative profit of GBP124 billion on quantitative easing from the years after the 2008 financial crisis until 2022.
thetimes.co.uk/article/treasury-to-pay-bank-of-england-170bn-to-cover-qe-losses-9n83vbkrz
Bond prices have declined over the past two years amid higher interest rates and tightened monetary policy which increased yields, as prices and yields move in opposite directions.
The current Bank of England interest rate of 5.25% is a 15-year high, which has accumulated losses on the bank's balance sheet. The bank is unable to make enough money on its portfolio of government bonds to cover interest payments to banks that hold cash at Threadneedle Street.
By Tom Budszus, Alliance News reporter
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