BoE paper: corporate bond purchases boosted market liquidity
Study of post-Brexit QE finds purchases helped support bond market liquidity
The Bank of England’s corporate bond purchase programme, launched in the wake of the UK’s Brexit referendum, appears to have supported bond market liquidity, according to a new staff working paper.
The study notes that quantitative easing (QE) programmes are not necessarily beneficial for market liquidity. While it can be helpful to have a price-insensitive buyer to back-stop the market, the authors say large purchases by central banks could also increase “search frictions” by reducing the
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