Why did Bank of England repo usage fall?

Usage fell because the Bank of England increased the cost of borrowing from its indexed long-term repo facility.

How much did lenders borrow from the BoE?

British-based lenders borrowed 1.280 billion pounds of six-month funds, the lowest in nearly three months.

What is the Bank of England's repo-led model?

It's a system for providing liquidity to the financial system by using repurchase agreements (repos) as the primary tool.

Home / Business and Economy / Bank of England's Repo Borrowing Hits 3-Month Low

Bank of England's Repo Borrowing Hits 3-Month Low

18 Nov

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Summary

Bank of England's indexed long-term repo use fell to lowest in almost three months.
Lenders borrowed 1.280 billion pounds, a significant drop from the previous week.
This decrease follows the central bank's recent increase in borrowing costs.

Bank of England's Repo Borrowing Hits 3-Month Low

The Bank of England witnessed a substantial decrease in the usage of its weekly indexed long-term repo facility. On Tuesday, British-based lenders secured only 1.280 billion pounds of six-month funds, marking the lowest borrowing amount seen since late August. This figure represents a significant drop from the 6.073 billion pounds borrowed in the preceding week.

The decline in activity is directly attributed to the central bank's decision to increase the cost of borrowing from this facility. Specifically, the spread for banks utilizing the highest-quality collateral at the indexed long-term repo was raised to 3 basis points over the Bank Rate, up from zero. This adjustment aims to rebalance incentives between different liquidity provision facilities.