Bank Of England Cuts Key Rate, Boosts Asset Purchases, TFSME Scheme On Covid-19

Trading 19 mar 2020 Commentaire »

The Bank of England cut the bank rate again, to a record low on Thursday, and expanded its bond buying scheme and the targeted funding measure for small and medium businesses, extending further support to the UK economy amid the spread of the coronavirus, or Covid-19. In a special meeting, the Monetary Policy Committee voted unanimously to increase the Bank of England's holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by GBP 200 billion to a total of GBP 645 billion, the bank said.

Policymakers were also unanimous in reducing the bank rate by 15 basis points to 0.1 percent. The bank has reduced the rate for the second time this month. The bank rate was last hiked in August 2018. They also unanimously decided on Thursday to enlarge the Term Funding for SME scheme. "Over recent days, and in common with a number of other advanced economy bond markets, conditions in the UK gilt market have deteriorated as investors have sought shorter-dated instruments that are closer substitutes for highly liquid central bank reserves," the bank said in a statement. "As a consequence, UK and global financial conditions have tightened." The majority of additional asset purchases will comprise UK government bonds, the bank said. Bank of England Governor Andrew Bailey said on Wednesday that the central bank is ready to what it takes to support the economy amid the severe shock caused by the spread of the coronavirus, or Covid-19 and urged short-sellers to just "stop". On March 11, the central bank had cut the base rate by 50 basis points and announced the TFSME scheme. Under the TFSME, the bank will offer, over the next 12 months, four-year funding of at least 5 percent of participants' stock of real economy lending at interest rates at, or very close to, Bank Rate, the central bank had said on March 11.

The HM Treasury and the Bank of England jointly announced a Covid19 Corporate Financing Facility, or CCFF, on March 17. The government will purchase commercial paper with the bank acting as it agent, to provide funding to non-financial businesses.

The next regularly scheduled MPC meeting will end on March 25, with the minutes published on March 26, the bank said. The central bank will release the minutes of Thursday's special meeting then.


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*Bank Of England Decides To Enlarge Term Funding For SME Scheme

Trading 19 mar 2020 Commentaire »

Bank Of England Decides To Enlarge Term Funding For SME Scheme


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*Bank Of England Boosts Bond Holdings BY GBP 200 Bln To Total GBP 645 Bln

Trading 19 mar 2020 Commentaire »

Bank Of England Boosts Bond Holdings BY GBP 200 Bln To Total GBP 645 Bln


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*Bank Of England Cuts Key Rate By 15 Bps To 0.1%

Trading 19 mar 2020 Commentaire »

Bank Of England Cuts Key Rate By 15 Bps To 0.1%


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*U.S. Leading Economic Index Inches Up 0.1% In February

Trading 19 mar 2020 Commentaire »

U.S. Leading Economic Index Inches Up 0.1% In February


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*South Africa CB Cuts Key Interest Rate By 100 Bps To 5.25%

Trading 19 mar 2020 Commentaire »

South Africa CB Cuts Key Interest Rate By 100 Bps To 5.25%


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German Business Sentiment Worst Since 2009 Amid Covid-19 Outbreak

Trading 19 mar 2020 Commentaire »

Germany's business confidence plunged to its lowest level since the global financial crisis as the spread of coronavirus took its toll on economic activity, survey results from the think tank ifo showed Thursday.

The ifo also downgraded its GDP forecast sharply due to the coronavirus, or Covid-19, pandemic.

Elsewhere, the think tank DIW also predicted a recession for the Germany economy this year.

The business confidence index fell to 87.7 in March from 96.0 in February. This was the biggest fall since 1991 and the weakest reading since August 2009.

The German economy is speeding into a recession, ifo President Clemens Fuest said. The business situation index slid to 93.8 from 99.0 a month ago. Likewise, the expectations index declined sharply to 82.0 from 93.2 in the previous month.

The March survey is based on around 90 percent of the usual number of responses. This was conducted between March 2 and 18.

All sectors reported sharp declines in March. In manufacturing, business sentiment hit its lowest since August 2009 and confidence among service providers logged the biggest drop since the survey began in 2005.

Confidence in trade also collapsed in March. But the fall in construction was comparatively moderate.

In order to stem the spread of new coronavirus infections, the government is restricting freedom of movement bringing public life largely to a standstill.

Consequently, the German economy is forecast to shrink 1.5 percent this year before expanding 3.7 percent in 2021, the ifo said in its spring forecast. In December, the think tank had forecast 1.1 percent growth for 2020.

In the first quarter of 2020, the ifo projected 0.1 percent expansion, but with the crisis taking full effect in the second quarter, GDP would fall 4.5 percent.

Regarding the labor market, the ifo said the unemployment rate will rise to 5.3 percent this year from 5 percent in 2019.

The ifo also presented a risk scenario in which the economic collapse was exacerbated, the recession prolonged, and the recovery slowed down.

"Under this scenario, the decline in economic output this year would rise to 6.0 percent, and at the end of 2021 GDP would still be 2.0 percent below the level it would have reached without the coronavirus crisis," the institute warned.

The DIW institute forecast only 0.1 percent contraction for 2020, based on the assumption that Germany will normalize quickly from the crisis situation.

However, if the impact of coronavirus on the economy deepens and persist longer, then the recession could be much more severe, the think tank warned.


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Indian Rupee Recovers From Record Low Against U.S. Dollar

Trading 19 mar 2020 Commentaire »

The Indian rupee rebounded from its record low against the U.S. dollar in evening deals on Thursday following intervention by the Reserve Bank of India.

The Indian rupee rose to 74.86 against the greenback, from a record low of 77.42 hit in the morning session.

The decline in the rupee was due to a stronger dollar, as emergency stimulus measures launched by governments and central banks around the world failed to ease investor fears that the world economy is heading toward a recession.

Media reports said that the RBI had intervened when the rupee reached the 75 mark to stem its decline.


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*Philly Fed Index Plunges To -12.7 In March

Trading 19 mar 2020 Commentaire »

Philly Fed Index Plunges To -12.7 In March


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*U.S. Initial Jobless Claims Jump To 281,000 In Week Ended 3/14

Trading 19 mar 2020 Commentaire »

U.S. Initial Jobless Claims Jump To 281,000 In Week Ended 3/14


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