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Gilts market unmoved by Bank of England MPC

The gilts market was unmoved after the Bank of England's decision to suspend the quantitative easing program was confirmed today. In reality the closure of the quantitative easing program, at least in the short term, was well flagged and very much expected by analysts and investors. However, the minimal movement in the gilts market would appear to indicate investors are now happy that the UK government is able to refinance current debt going forward.

However, there is still uncertainty in the overall financial markets as to whether the decision to suspend the quantitative easing program is sensible because the UK economic upturn appears to be fragile at best. The problem is that at some time the program would have to end and many believe the decision to close the program in the short term is a risk worth taking. At some point the UK economy will have to stand on its own 2 feet and what better time than when the economy officially moved out of recession?

It will be interesting to see whether the gilts market does in fact respond over the next few days as more and more opinions pour into the marketplace.

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