Bank of England to pump 55 bn pound into credit markets

London, Sep 26 (PTI) U.K.'s central bank, the Bank of
England will pump an additional 55 billion pound in a fresh
effort to address worsening credit market pressure as hopes
for a U.S. bail-out faded, media report say.

The operation was consistent with its objective, which
was forcing down the three-month benchmark Libor interbank
lending from Thursday's 6.2762 percent closer to 5 percent
base rate, The Times report quoted the bank as saying.

Three month dollar Libor rose by nearly 30 basis points
to 3.76 percent.

Further, the bank stated that it intends to offset the
additional reserves taken up in the long-term repo operations
in its other operations, if necessary by draining reserves.

These operations are intended to address funding
pressures over quarter end, the report quoted the Bank as
saying, adding that it formed part of a coordinated series of
actions with other central banks including the U.S. Federal
Reserve, the European Central Bank and the Swiss National
Bank.

The Bank of England would increase the term of its
existing operations to lend U.S. dollar funds against
collateral eligible in the Banks short-term repos and U.S.
Treasuries.

An operation to lend USD 30 billion funds for a week
would take place today, alongside an operation to lend funds
overnight and the size of the Banks overnight dollar repo
operation would be USD 10 billion Friday, a Bank of England
statement said.

Besides, the bank would conduct weekly auctions and
accept mortgage-backed securities as collateral from Monday.

The first such operation will be an auction for 40
billion pound maturing on 15th January, 2009.