Experts: Bank of England to buy bonds to 1.17 billion boosts confidence

After the frustration and anxiety that seized officials in the Bank of England (BoE) due to failure to achieve the target of the process of buying bonds, during the past week, resulting in the achievement of some government debt negative returns, here is the scene changed and the picture changed and solve optimism replaces anxiety and frustration, the bank has managed to buy $ 1.17 billion pounds of bonds under quantitative easing plan adopted by the British government to support the national economy, after the voters vote in favor of the exit from the European Union, he was quoted as saying "the economic newspaper."

Said Robert Rowe, a researcher at the Bank of England, most notably can Nrsdh in the process of the Bank's success in buying bonds is not a procurement process in itself, but more importantly, who are interested in buying rate was twice the required amount to 2.7 times, and this reveals investors' confidence to the economy British.

Said Robert Rowe during an interview with the newspaper that what happened last week from the bank failed to find a sufficient number of people willing to sell, prompting him to buy at a higher price than the market prices, had been exceptional, and then we are now confident that the buying experience failure the former was due to regulatory factors, rather than doubts about the British economy capabilities.

It is scheduled to take place a purchase central bank bills the British Treasury, three times a week up to and including the month of October next, that the program includes the purchase of a limited amount of corporate bonds, but that would be exclusively on the debt with fixed interest rate issued by companies whose bonds, hoping that further enhances the movement of economic activity.

The Bank of England may monitor the amount of 60 billion pounds a month for a program of quantitative easing, the Bank plans now to increase the program's goal in August the current 16 per cent, in the hope that this will contribute to avoid the economy entering a recession.

On the importance of the success of the current phase of the purchase of the Bank of England Treasury bonds, explained for "economic," said Dr. Martin Howard, a professor of the British economy at the London School of Economics, said that if the bank succeeded in convincing Treasuries holders of disposition by sale, it will ensure that the money will pay for them It will be pumped into the real economy, which boosts productivity sectors, whether in services or industrial sector and then also increases employment rates.

Howard added that Britain occupies the fifth place in the international economy, there is a follow-up to a minute for the program of quantitative easing launched by the extent of his success, no doubt that what happened in the last week and a failure to achieve the desired goals, create a state of anxiety not only in Britain but also in the entire European continent, that the British economy is suffering a real trouble, and this led to a sharp decline in the British and European bonds alike.

Indeed, the yield on the Althelatinih bonds (30-year) increased by 0.04% to 1.31%, and the yield was fell last week, with two points in the wake of the Bank of England failed to achieve its objectives to buy Treasury bonds, and the situation was better for bonds ten years, which increased to 0.56 %, but the good news about the British Treasury bonds, although be positive, it represents only a part of the British economic scene is characterized by uncertainty and gives conflicting indicators, confuse economic leadership about the real impact of the referendum out of the European Union on the economic situation.

The deterioration of the current in the price of sterling to the high cost of living and the cost of inputs to the production process, especially for industries that rely on imported production components from abroad, the official The statistics indicate an increase in the overall cost of production inputs by about 4.3% during the past month, and is the first increase in the cost of production since September 2013, while imports increased some commodity prices of 10.2%, and increased imports of metal prices by about 12.4%.

He noted Adam Drake of the Confederation of British Industry, that there was no doubt that the bad news related to sterling and the high cost of living and the cost of inputs to the production process, will lead to the erosion of the economic gains from interest rate cut and the application of the quantitative easing program, specifically the purchase of the Bank of England Treasury bonds both from individuals or some of the companies, because the increase in direct financial markets as a result of the procurement process Ststensvha price increases and inflation.

Drake explained that the upbeat mood that prevailed among some companies, which achieved profits as a result of export has fallen, because the cost of production in the UK rose, and then lost that competitive advantages that can be achieved as a result of low sterling exchange rate companies.