BoE conducts additional indexed long-term repo operations – RBC CM

Elsa Lignos, Senior Currency Strategist at RBC Capital Markets, suggests that the BoE conducts the third of its additional indexed long-term repo operations today (on top of its regular monthly ILTR operations).

Key Quotes

“These were scheduled in advance ahead of the referendum to provide extra liquidity in case it was needed. Our UK economist notes that last week, in the previous such operation, take up of this 6m liquidity was low at GBP370mn versus the 2016 average at these operations of ~GBP2.5bn. So this morning’s operation will give some indication of how banks’ liquidity needs have evolved since the leave vote was confirmed. Only if the usage of this facility is significantly above the GBP2.5bn average would it be reasonable to start drawing the conclusion that there is any sign of stress, although that is not something we expect.”