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Qe - £8 Billion Profit

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7791073/Bank-of-England-made-8bn-profit-from-quantitative-easing-fund.html

A sharp increase in gilt prices over the past two weeks, as traders pull money out of European investments and into UK government debt, has swung the Bank's QE fund into profit for the first time in months. The news underlines the fact that Britain has unexpectedly established itself as a safe haven destination during the European debt crisis.

The Bank's original investment of £198bn of gilts (UK government bonds) is now worth £199bn. It has also earned £8bn of interest receipts, although this has been offset by £1bn it had to pay in interest on its reserves.

Simon Ward, chief economist at Henderson Global Investors, said that although the fund is currently running an unprecedented level of profit, this would not last for ever.

"The Bank will be under no illusions that the programme will remain in profit once it tries to sell its gilts," he said. "A rise in yields of half a percentage point would be sufficient to wipe out the current surplus."

The profit on the QE account does not have any benefit for the Government, which is looking for means of reducing its £156bn budget deficit, since the money is merely a transfer of cash from one part of the public sector to another. In fact, the Bank has signalled that it expects to make a small loss from the QE investment by the time it sells the gilts off. But it stresses that this loss will be far outweighed by the economic benefits of the policy.

Under its programme, the Bank created money and used it to buy a portfolio of gilts – essentially using this investment as the most efficient way to pump cash directly into the economy. However, the European sovereign debt crisis has provided an unexpected boost for the Bank's investment. Over the past two weeks, prices of gilts have leapt higher, and their yields consequently dropped from around 4pc to just over 3.5pc.

Simon Hayes, UK economist at Barclays Capital, said: "It just shows you that quality is a relative concept. It has also been the case that the Bank of England has been extraordinarily dovish, and the Government's rhetoric about its deficit plan has been along the right sorts of lines in terms of satisfying markets."

Edited by pajd

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Just an excse to print more money into oblivion, hell who needs an economy who needs to go to work when the printer can take the strain of everything and those Chindians will be happy to work for worthless paper.

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My edit option isnt working but i guess this tells the real story.............

Simon Ward, chief economist at Henderson Global Investors, said that although the fund is currently running an unprecedented level of profit, this would not last for ever.

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7791073/Bank-of-England-made-8bn-profit-from-quantitative-easing-fund.html

A sharp increase in gilt prices over the past two weeks, as traders pull money out of European investments and into UK government debt, has swung the Bank's QE fund into profit for the first time in months. The news underlines the fact that Britain has unexpectedly established itself as a safe haven destination during the European debt crisis.

The Bank's original investment of £198bn of gilts (UK government bonds) is now worth £199bn. It has also earned £8bn of interest receipts, although this has been offset by £1bn it had to pay in interest on its reserves.

Simon Ward, chief economist at Henderson Global Investors, said that although the fund is currently running an unprecedented level of profit, this would not last for ever.

"The Bank will be under no illusions that the programme will remain in profit once it tries to sell its gilts," he said. "A rise in yields of half a percentage point would be sufficient to wipe out the current surplus."

The profit on the QE account does not have any benefit for the Government, which is looking for means of reducing its £156bn budget deficit, since the money is merely a transfer of cash from one part of the public sector to another. In fact, the Bank has signalled that it expects to make a small loss from the QE investment by the time it sells the gilts off. But it stresses that this loss will be far outweighed by the economic benefits of the policy.

Under its programme, the Bank created money and used it to buy a portfolio of gilts – essentially using this investment as the most efficient way to pump cash directly into the economy. However, the European sovereign debt crisis has provided an unexpected boost for the Bank's investment. Over the past two weeks, prices of gilts have leapt higher, and their yields consequently dropped from around 4pc to just over 3.5pc.

Simon Hayes, UK economist at Barclays Capital, said: "It just shows you that quality is a relative concept. It has also been the case that the Bank of England has been extraordinarily dovish, and the Government's rhetoric about its deficit plan has been along the right sorts of lines in terms of satisfying markets."

Hooray!! The BoE has made 8 billion in interest!

Where does that come from?

Oh yeah, our taxes.

Crazy fooked up monetary system

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And what would happen if the BoE actually tried to take this 'profit'? :rolleyes:

Really, people writing financial columns should be forced to undergo some sort of competency exam.

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Net worth of Uk - £7 trillion?

Collapsing pound - say 20% thanks to QE.

Loss - £1.4 trillion.

+ Cadbury takeover and any other companies looted of future revenue and Uk based jobs thanks to a trashed currency making them cheap buyouts.

Mind you much of that net worth is completely fake land value, so to a certain extent maintaining the illusion has kept that part higher for the short term.

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being slow here, but QE is buying up its own gilts (which is what it has been doing), how has the BOE managed to make £8Bn in interest in paying interest to itself on its own gilts......

plus, they are fairly illiquid, if we are going to continue issuing £153Bn a year of new gilts.....

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In the same way that everyone's house value has tripled in 10 years. Its all alright until we need to sell them.

being slow here, but QE is buying up its own gilts (which is what it has been doing), how has the BOE managed to make £8Bn in interest in paying interest to itself on its own gilts......

plus, they are fairly illiquid, if we are going to continue issuing £153Bn a year of new gilts.....

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being slow here, but QE is buying up its own gilts (which is what it has been doing), how has the BOE managed to make £8Bn in interest in paying interest to itself on its own gilts......

plus, they are fairly illiquid, if we are going to continue issuing £153Bn a year of new gilts.....

The BoE doesn't buy it's own Gilts, it buys the Governments Gilts (indirectly from the marketplace). The interest comes from the taxpayer.

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  • 260 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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