LONDON (Thomson Financial) - The Bank of England has announced it is to offer funds with longer-than normal repayment terms to help alleviate conditions in the tight money markets and says it is prepared to take further steps to keep overnight rates in line with the Bank Rate.
The BOE is holding a round of fixed rate operations today, offering funds at the bank rate of 5.75 pct until next Thursday in a standard operation.
Then next Thursday the BoE says it will conduct an open market operation offering 10 bln stg worth of funds at the Bank Rate with a maturity rating of five weeks.
This is believed to be the first time funds have been offered with a maturity length as long as five weeks, with open market operations usually offering funds for just one week.
The BoE said it is conducting the operation as money market conditions tend to be particularly tight at the end of the year, and this will ‘provide greater assurance to banks in managing their liquidity positions over that period’.
The Bank added it ‘stands ready to take further measures to keep overnight rates in line with Bank Rate’. >>>>
BoE offers cash strapped money markets 10 bln stg for five weeks UPDATE
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