Bank of England: Risk of another fire-sale in gilts significantly reduced

Posted on October 18, 2022Comments Off on Bank of England: Risk of another fire-sale in gilts significantly reduced

© Reuters. A view of the Bank of England in London, Britain September 30, 2022. REUTERS/Maja Smiejkowska

LONDON (Reuters) – The Bank of England on Tuesday said liability-driven investment funds were now better prepared to manage shocks like the one triggered by September’s mini budget, and the risk of another “fire sale” dynamic in gilts had been significantly reduced.

“Taken as a whole, LDI funds are now significantly better prepared to manage shocks of this nature in the future,” BoE Deputy Governor Jon Cunliffe said in a letter parliament’s Treasury Select Committee.

“As such, the risk of LDI fund behaviour triggering ‘fire sale’ dynamics in the gilt market and self-reinforcing falls in gilt prices has been significantly reduced.”

Source link

Comments Off on Bank of England: Risk of another fire-sale in gilts significantly reduced