BOE Actions Prompted by Concern That Cash Calls Today Would Trigger Gilt Crash

The Bank of England’s decision to announce unlimited and immediate purchases of long-dated bonds was prompted by fears that collateral calls as soon as Wednesday afternoon could trigger a further crash in gilts, according to a person familiar with policy makers’ decision making.

The Bank had been warned by investment banks and fund managers in recent days that the collateral requirements could create a situation in which forced selling drove up the yield on UK debt, the person said, asking not to be named discussing the central bank’s deliberations.