Published: 29 September 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
The Bank of England (BoE) intervened in bond markets yesterday as plunging markets for UK debt sent borrowing costs spiralling and pension funds dumped their assets. The BoE said it will launch a “time limited” UK government bond-buying programme as an emergency move to stave off a "material risk to UK financial stability,” "restore orderly market conditions" and stabilise what it described as "dysfunctional markets". The plan is to abandon previous plans to sell £80bn of gilts on its balance sheet and instead buy long-dated government bonds after the cost of borrowing spiked to surpass rates paid by Italy and Greece. The central bank said in a statement: "This repricing has become more significant in the past day — and it is particularly affecting long-dated UK government debt. Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy." The BoE didn’t give an exact figure of how much it will purchase – although the BBC and the Financial Times among others are reporting a figure of £65bn - but said it will be carried out on "whatever scale is necessary", adding the Treasury would underwrite any losses.
"We welcome steps announced by the Bank of England to restore orderly conditions through temporary purchases of long-dated UK government bonds," a Pensions Regulator spokesperson said yesterday.
Why Media is an award-winning design, marketing, digital communications and PR agency offering tailored solutions to companies on a global scale. We have extensive experience in delivering design and marketing services to a spectrum of companies including professional services, property companies, financial institutions and shopping centres. We have offices in London UK, Hertford UK, Finestrat ES & Brescia IT.
Marketing Contact
Name: Claire White
E-Mail: claire@whymedia.com
Telephone: 01992 586 507
