Machine Learning

The central bank has been keen to show it is not financing the government's budget deficit To do this, it uses the debt-to-GDP ratio, which is the latest measure of its efforts to wean the economy off its addiction to debt But even if it is trying to stop the borrowings, it cannot do that overnight, especially not with so much debt to service The central bank can try to push up the interest rate it charges banks to borrow from it This is called repo € or repurchase operations But the repo rate is generally not much higher than the government bond yield, which is why the latter is the true measure of the central bank's write-downs So, if the 10-year government bond yield goes up, the central bank is having to buy more bonds to keep injecting money into the banking system The central bank cannot simply raise the rate it charges banks to borrow from it as there is a risk of savers dumping their money into the banking system because of the higher interest rate And that is why it has been pushing up t