Bank of England intervenes a second time to calm markets after ‘material risk’ to UK financial stability
This comes as government borrowing continued to rise yesterday and the announcement from the Bank of England of additional measures to support market functioning and an orderly end to its gilt purchase scheme.announced it would carry out temporary purchases of “long-dated” UK government bonds from September 28.
The bank will now purchase index-linked gilts, these being the purchase of government bonds which have an interest rate which is in line with inflation.This move from the bank comes following its Monday announcement that it will double the amount of bonds it would buy alongside chancellor Kwasi Kwarteng’s decision to bring forward the date of his plan to balance the government’s finances failed to give significant reassurance markets.
“To achieve this, the Bank will carry out temporary purchases of long-dated UK government bonds from September 28.“The purchases will be carried out on whatever scale is necessary to effect this outcome. The operation will be fully indemnified by HM Treasury.”
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