Ward says there needs to be a shift in the bank’s market operations towards longer-term lending. He suggests widening the definition of eligible collateral for all longer operations to include mortgages.
He says the immediate repayment by the Treasury’s Debt Management Office of remaining Government borrowing from the BoE would release funds for additional lending to banks. Ward says there should be extra gilt issuance by the DMO, with the proceeds depos-ited at the BoE for onward lending to banks.
He calls for the introduction by the DMO of a “term securities lending facility.”
He says: “Cutting the bank rate against a backdrop of accelerating prices and a tumbling pound risks entrenching high inflation expectations.
“The authorities should deploy their full arsenal of market measures before lowering off- icial rates again.”