The Bank of England said on Wednesday it was "closely monitoring" liability-driven investment (LDI) funds ahead of the end of its support for the bond market on Friday.
The BoE also said the size and composition of Britain's current account deficit "make it vulnerable to reductions in foreign investor appetite for UK assets" and that this "may be heightened in current circumstances".
Headlines:
- GILT PURCHASES ARE A TEMPORARY PROGRAMME, WILL BE UNWOUND IN SMOOTH AND ORDERLY FASHION
- "CLOSELY MONITORING" LDI FUNDS AS THEY PREPARE FOR WHATEVER ASSET PRICES PREVAIL WHEN BOE STOPS BUYING GILTS
- GLOBAL FINANCIAL MARKETS AFFECTED BY SPILLOVER FROM DYSFUNCTION IN UK LONG-DATED GILT MARKET
- NOT REASONABLE TO EXPECT FUNDS TO INSURE AGAINST ALL OUTCOMES, BUT WORKING ON TOUGHER REGULATION
- WILL BE "CHALLENGING" FOR SOME HOUSEHOLDS TO MANAGE RISING COST OF ESSENTIALS AND HIGHER INTEREST RATES
- FPC MAINTAINS BANKS' COUNTERCYCLICAL CAPITAL BUFFER (CCYB) AT 2%, WITH EFFECT FROM JULY 2023
- IF INTEREST RATES RISE AS MARKETS EXPECT, SHARE OF HOUSEHOLDS WITH HIGH MORTGAGE DEBT SERVICING LEVELS TO REACH PRE-FINANCIAL CRISIS PEAK IN LATE 2023
- UK VULNERABLE TO LOSS OF FOREIGN INVESTOR APPETITE FOR UK ASSETS, RISKS MAY BE HEIGHTENED CURRENTLY
- UK BANKS HAVE CAPACITY TO WEATHER SEVERE ECONOMIC OUTCOMES
