UK Chancellor Has No Plans to Change Interest on BOE Reserves
- Reeves addresses BOE bond portfolio losses at press conference
- Investors are speculating over change to accounting treatment
This article is for subscribers only.
The UK’s new Chancellor of the Exchequer said she has no plans to change the way interest is paid on the Bank of England’s reserves, amid growing scrutiny of the losses the central bank’s crisis-era bond buying program incurs for the government.
Rachel Reeves’ comments addressed a policy known as tiering — whereby a portion of commercial banks’ deposits held at the central bank are paid either zero interest or a discounted rate. Former prime minister Gordon Brown backs the idea as a way of increasing fiscal headroom, and it’s among a range of proposals aimed at addressing losses caused by the rise in interest rates.