Bank of England’s £100bn bond boost ‘is risk to savers’

1 min

11 shares, 66 points
Bank of England’s £100bn bond boost ‘is risk to savers’

Governor Andrew Bailey said the drastic measures were necessary despite signs that the economic damage from the lockdown had been less severe than forecast. He said: “As partial lifting of restrictions takes place, we do see signs of some activity returning. We don’t want to get too carried away with it – we are still living in very unusual times.”

Tory peer Baroness Altmann, a former pensions minister said: “This is a massive expansion of the bondbuying programme.

“The Bank of England is bailing out the Government which is bailing out the economy. By doing it in this indirect manner there is a big risk to pension funds.

“Inflating the financial markets will put savers and pension funds at risk.”

Yesterday’s decision by the Bank of England Monetary Policy Committee raised the amount of money pumped into the economy through the bond buying programme during the pandemic to £300billion.

The committee voted eight to one to expand the programme to £745billion, following the extra £200billion announced in March.

The Bank held interest rates at an all-time low of 0.1 percent and confirmed there had been no discussion at the meeting of it below zero – effectively paying banks to borrow – despite speculation about the possibility.

Mr Bailey said negative rates were being assessed, adding the Bank “won’t rule anything in or out”.

The drastic measures follow official figures earlier this week showing the economy plunged by a record 20.4 percent during April.

But the Bank said the fall in Gross Domestic Product between April and June may not be as bad as it set out in gloomy May forecasts, thanks partly to a recovery in consumer spending and the housing market.

Bank chiefs expect the fall in UK GDP over the first six months of this year to be around 20 per cent, rather than the 27 percent forecast in a report in May.

The Bank said the “recovery in demand and output was occurring sooner and materially faster” than expected last month.

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