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Bank of England Injects Liquidity

The Bear Stearns effect was felt across the Atlantic when the Bank of England announced its £5 billion ($10.01 billion) injection into the short-term money markets shortly after JPMorgan Chase said it will be buying the troubled investment bank. However, the surprise injection of reserves appeared to do little to bring sterling overnight rates closer back to bank rates. Market sources instead reported that the spread between the two widened after the announcement of the extra funds. The Bank of England is not due to make its next decision on headline interest rates until April 10.

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