UK Govt transferred over 14bn GBP to the BoE, largest transfer ever, to cover QE losses

<p>The UK Treasury sent over 14.3bn GBP to the Bank of England in July, which is the biggest state transfer on record, to cover losses on the Bank's QE steps</p><ul><li>transfers have totalled more than 30 bn GBP in the past 11 months</li></ul><p>Numbers come from the UK's Office for National Statistics.</p><p>-</p><p>As part of its QE program the BoE bought UK government bonds with £875 billion it created between 2009 and 2021</p><ul><li>those gilts pay a fixed interest rate to the bank</li><li>the money it created (“central bank reserves”) is held by commercial banks and earns interest at the bank’s main rate</li><li>When interest rates were below 2%, the QE program was profitable for the bank, which transferred the gains backs to the government. With the BOE’s key rate at 5.25%, the program is now deeply in losses with net payments now being made to the commercial banks. </li></ul><p>Info comes via a Bloomberg report, gated.</p>

This article was written by Eamonn Sheridan at www.forexlive.com.