Debt office keeps an eye on Bank

BRITAIN’S debt issuance agency is watching the Bank of England’s asset-buying programme “incredibly carefully” to ensure it does not hurt liquidity in the gilts market, the agency’s head said in an interview.

A newspaper report quoted Robert Stheeman, chief executive of Britain’s Debt Management Office (DMO), as saying that his agency was watching the Bank of England’s £325bn quantitative easing bond-buying scheme closely because of concerns that the scale of intervention could distort gilt prices.

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“As long as the gilts market remains liquid and efficient, and is able to take down our supply with the minimum amount of disruption to the price formation mechanism, I am happy,” he said. “If we see signs that liquidity in the market is being seriously affected by the bank’s purchases, of course we would talk to the bank. We watch their operations incredibly carefully. But so far so good.”

When asked whether more QE would risk pushing up the cost of government debt, Mr Stheeman said that it “could”, the report said.