LONDON (Reuters) - Fears that the Bank of England is bailing out Britain’s government by financing its coronavirus surge in public spending are misplaced and the central bank has not lost credibility in markets, BoE Deputy Governor Ben Broadbent said.
“Were there a serious concern that inflation would drift away from target, whether because of higher levels of debt or for any other reason, you’d expect to see it reflected in higher ‘breakeven rates’ in gilts markets,” he said in a speech.
“Thus far, that has not happened.”
Several top BoE officials have sought to explain why the BoE’s decision to ramp up its buying of government bonds since the onset of the COVID-19 crisis does not mean it is resorting to “monetary financing” of the government’s spending push.
Writing by William Schomberg, editing by Estelle Shirbon
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