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Bank of England probes potential information leak

November 7, 2020
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Possible leak detailed the central bank’s plans to expand its bond buying

The Bank of England and UK Treasury are both investigating a possible leak detailing the central bank’s plans to expand its bond buying by a surprising amount.

Officials at the two institutions are enraged with a story in The Sun newspaper, claiming the BoE was set to increase the programme’s size by more than economists had estimated. The report, published hours before Thursday’s market-moving announcement, cited unidentified people with knowledge of the policy meeting’s outcome. The pound fell briefly after it was released.

Decisions by central banks such as the BoE and the US Federal Reserve are closely-guarded secrets because of the huge implications for financial markets worth trillions of dollars. The BoE’s nine-member Monetary Policy Committee decided on the increase on Wednesday.

“It weakens the institution as a whole and its messaging,” said Liam O’Donnell, a money manager at Aberdeen Standard Investments. “There certainly seems to have been a genuine leak. There is clearly a risk that the market could be spoofed going forward, and it could make future decisions more dangerous from a market-trading impact point of view.”

The report is the latest example of potential leaks of sensitive information in the UK.

The government is also looking into a leak last weekend of plans to put England in another lockdown, forcing it to bring forward the official announcement before the start of restrictions Thursday. The early information may have inspired panic-buying in shops and a surge of people visiting restaurants and pubs before they closed for a month.

Governor Andrew Bailey said the central bank would look into the matter. Rishi Sunak, Chancellor of the Exchequer, is also said to be furious and the Treasury is probing the leak, according to a source familiar with the matter.

A BoE spokesman declined to comment beyond Mr Bailey’s remarks, while the Treasury didn’t respond to a request for comment.

The Sun reported that officials were expected to announce an increase of around £150 billion ($195bn), and possibly as high as £200bn, which would have been twice as much as economists had anticipated.

The pound fell by as much as 0.4 per cent against the dollar after the publication of the story. Sterling then rose after the BoE announcement.

The Sun also included details of policies to be announced by Mr Sunak later on Thursday.

Minutes of the BoE decision showed that, in line with usual practice, a Treasury representative was present at the meeting. The central bank’s announcement was published alongside an exchange of letters between Mr Bailey and the Chancellor that authorised the QE increase.

The central bank came under scrutiny last year after reports a third-party supplier had gained unauthorised access to the BoE’s back-up audio feed, potentially giving traders an edge. However, UK regulators found in September that there was no leak of inside information.

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