Sterling Repo Rates Surge as Banks Repay Covid-Era BOE Loans

The cost of borrowing in a key segment of UK money markets has soared in recent days, a sign of funding tension as the Bank of England continues to drain cash from the financial system.

Sterling repo rates, which reflect the interest rate financial institutions pay to borrow cash by pledging gilts as collateral, are under strain. This week, they’ve risen to more than 25 basis points above the BOE’s deposit rate, the widest premium outside of readings surrounding quarter-end dates since March 2020, according to WMBA Ltd. data.