Bank cuts weekly gilt purchase to 4.5 bln stg

LONDON (Reuters) - The Bank of England said on Thursday it would buy 4.5 billion pounds of gilts next week as part of its quantitative easing programme, less than the 6.5 billion pounds a week it has bought since mid-April.

Earlier on Thursday the Bank said it would not expand its 125 billion pound quantitative easing programme this month. This left it only around 13 billion pounds for the rest of the month, and the BoE said asset purchases would continue until July 29, a week before the August policy meeting.

The Bank said it will purchase up to 2.25 billion pounds of long-dated stock on July 13 and 2.25 billion pounds of medium-term securities on July 15.

"They signalled that this morning when they didn't increase (the total), and that obviously suggested they couldn't keep going at the same pace," said John Wraith, head of sterling rate product development at RBC.

"It doesn't get them quite get them to the next meeting, but near enough. They'll have their detailed forecast by then and will decide whether to pick up QE again or not," he added.

The Bank said it would no longer buy the 4.75 percent 2020 gilt as it owned more than 70 percent of the free float, and would keep the gilts it bought under review, based on gilts' free float and price compared to others of a similar maturity.

The yield on the 2020 gilt rose to stand almost 20 basis points up from its opening level at 3.85 percent.

The Bank said it wanted to buy the following gilts.

July 13