The Bank of England is sitting on an £8bn net profit from its £200bn quantitative easing programme.
A sharp increase in gilt prices over the past two weeks, as investors make the 'flight to quality' due to the eurozone concerns, has powered QE into profit for the first time in months, The Telegraph reports.
The Bank's original investment of £198bn of gilts is now worth £199bn. It has also earned £8bn of interest receipts, although this has been offset by £1bn it had to pay in interest on its reserves.
It is a significant turnaround for the programme, which was running a £3bn loss a few months ago.
Simon Ward, chief economist at Henderson Global Investors, says although QE is currently running an unprecedented level of profit, it will not last for ever.
"The Bank will be under no illusions that the programme will remain in profit once it tries to sell its gilts," he says. "A rise in yields of half a percentage point would be sufficient to wipe out the current surplus."
The £8bn is only a paper profit and the Bank has previously signalled it expects to make a small loss from the QE by the time it sells the gilts.
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