The central bank is attempting to stop tumbling government bond prices causing a market collapse
The Bank of England has hit the panic button yet again, moving to further bolster its emergency bond-buying plan. It's an attempt to stop tumbling government bond prices causing a market collapse.
It comes after the sell-off in government bonds – also known as gilts – resumed on Monday as investor concerns failed to subside despite action by the Bank of England to double its daily bond-buying limit and Chancellor Kwasi Kwarteng’s move to bring forward his new fiscal plan and independent economic forecasts to October 31.Long-dated gilt prices tumbled, which sent yields on 30-year bonds soaring to 4.
It added that its latest efforts will “act as a further backstop to restore orderly market conditions”. Threadneedle Street intervened with emergency action on September 28 when the mini-budget market chaos caused the pound to tumble and yields on gilts to soar, which left some pension funds across the industry close to collapse.
The Bank laid bare the scale of the woes last week when it said the scheme helped the UK narrowly avoid a market meltdown caused by concerns over the Chancellor’s tax cut plans. But gilt yields started to surge once more due to ongoing fears over the Government’s economic policies and worries that the October 14 deadline set by the Bank for its bond-buying scheme could see a return to pension fund woes.
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