Credit Crunch

The Bank of England injects £10 Billion into the UK markets

Following the credit crunch crisis (bad credit mortgages) that has hit our shores from the US troubled economy The Bank of England has surprisingly back tracked and announced that it is planning to inject £10 Billion to UK Markets.  The move comes only after a week after Governor Mervyn King said such steps would encourage “risky behavior”. 

This measure is being taken to alleviate the strains in money markets especially bad credit mortgages.  The Bank of England said it will accept mortgage collateral at the auction of £10 billion pounds in loans next week. It will have rate of 6.75 percent.The three-month London inter bank offered rate in pounds, or Libor, dropped 0.2 percentage point to 6.55 percent  in London. The overnight rate declined 0.25 percentage point to 5.89 percent. The gap between the three-month Libor rate, which reached a high this year of 6.9 percent on Sept. 11, and the bank’s benchmark had reached the widest in at least two decades.