LONDON: British government bonds rose on Wednesday after a senior policymaker at the Bank of England said the central bank may need to buy more gilts over a longer period than before to help Britain's economy.
The March gilt future was 23 ticks higher, touching a fresh one-month high and topping Tuesday's peak when investors bought British government debt as a safe haven in response to Italy's inconclusive election outcome.
The equivalent Bund future was 4 ticks higher on Wednesday.
Paul Fisher - a member of the Bank of England's Monetary Policy Committee who this month was in a minority of policymakers backing a resumption of bond buying by the Bank of England - said the 25 billion-pound extension of the plan he supported might need to be the first in a series of new purchases.
"Arguably, his comments about a possibly extended progamme of purchases is something the gilt market is taking into account for its slight outperformance," said RBC Capital Markets' strategist Sam Hill.
Earlier on Tuesday, deputy governor Paul Tucker said he was open to more bond purchases, but that "sound money" was his priority, and that much of the effect of existing purchases was still to be felt.
Ten-year gilt yields fell 4 basis points to 1.95 percent.
Later on Wednesday, Britain will release the second estimate of fourth-quarter GDP, expected to confirm that the economy contracted by 0.3 percent on the quarter.
Comments
Comments are closed for this article.