Bank of England ‘closely monitoring’ liability-driven investment funds as bond support nears end

The Bank of England said on Wednesday it was “closely monitoring” liability-driven investment funds ahead of the end of its support for the bond market on Friday.

However, the BoE has said from the start that its gilt purchase program is temporary, ending on Oct. 14, and Governor Andrew Bailey said on Tuesday that if funds needed to restructure, they had just three days left to “get this done.”“The Bank, The Pensions Regulator and the Financial Conduct Authority are closely monitoring the progress of LDI managers as they put their funds on a sustainable footing for whatever level of asset prices prevails when the Bank ceases purchasing gilts,” it said.

While funds could not be expected to prepare for every market shock – and many LDI funds were based outside Britain – regulators would soon seek to tighten rules, the FPC added. More broadly, the BoE said the global economic outlook had deteriorated significantly since July, and rising interest rates would pose growing challenges to households, though banks remained well capitalized.

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Bank of England expands efforts to stabilize bond marketThe Bank of England said it will now purchase up to £10-billion of long-term bonds a day, including £5-billion of conventional bonds and £5-billion of index-linked bonds
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Bank of England expands efforts to stabilize bond marketThe Bank of England on Tuesday expanded its efforts to stabilize the bond market to include inflation-linked bonds amid continuing concerns about the government's budget. Translation: Cebtral banks are manipulating interest rates to keep money as cheap as possible.
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