Market Analysis

The Bank of England allocated £17.186 billion ($21.84 billion) in one-week funds through its short-term repo operation on Thursday, marking the highest utilization of the facility since its launch in October 2022. This record follows recent weeks of increased usage.

This weekly repo operation is utilized by the BoE to manage money market rates in line with its official Bank Rate, while it reduces reserves in the financial system under its quantitative tightening (QT) program.

As part of QT, the BoE is selling a significant portion of government bonds purchased over the past 15 years through its quantitative easing program, and allowing others to mature.

Governor Andrew Bailey highlighted last week that the growing use of the short-term repo facility underscores the value of having well-established liquidity mechanisms as the central bank shrinks its balance sheet.

Paraphrasing text from "Reuters" all rights reserved by the original author.