Thursday May 8, 01:19 PM
BoE 15.3 bln pound weekly money auction receives bids worth 71.5 bln pounds
LONDON (Thomson Financial) - The Bank (NASDAQ: TBHS - news) of England's weekly money market auction of 15.3 billion pounds was heavily
subscribed with bids for 71.5 billion pounds.
The open market operation, which auctions off money at the BoE's 5.00 percent Bank rate, is performed weekly, and the high interest underscores the fact that the credit crunch is not yet over.
'It suggests cash is still very much in demand and is even rising -- a worrying development barring any mitigating circumstances,' said John Ratcliffe at IFR Markets.
Interbank lending rates have been inching down over the past week -- indicating a steady, although gradual, improvement in credit conditions.
However, they still remain far above normal levels, despite a liquidity scheme introduced by the BoE last month.
The auction followed the decision by the central bank to leave interest rates unchanged, as most economists were expecting, leaving a quarter point cut in June a near certainty as the economic slowdown gathers pace.
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