BoE paper: corporate bond purchases boosted market liquidity

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The Bank of England’s corporate bond purchase programme, launched in the wake of the UK’s Brexit referendum, appears to have supported bond market liquidity, according to a new staff working paper.

The study notes that quantitative easing (QE) programmes are not necessarily beneficial for market liquidity. While it can be helpful to have a price-insensitive buyer to back-stop the market, the authors say large purchases by central banks could also increase “search frictions” by reducing the

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