The Bank of England said its bond purchases are set to run through mid-October in an effort to restore orderly market conditions.
U.K. central bank is seeking to restore order to the market after tax cuts prompted a big selloff
Tweet on Bank of England on the buying bond scheme
Bank of England to Buy Bonds in Bid to Stop the financial woes!
U.K. central bank is seeking to restore order to the market after tax cuts prompted a big selloff, as Pound tanked against the USD, via @WSJ pic.twitter.com/KuIsamw4nu
— The_Journalbiz (@the_journalbiz) September 28, 2022
The Bank of England on Wednesday said it would buy U.K. government bonds with long maturities “on whatever scale is necessary” in an effort to restore order to the market after a large set of government tax cuts sent borrowing costs soaring.
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The furious selloff in U.K. government debt in recent days ripped through normally staid parts of the financial markets. Pension funds and insurers who hold financial derivatives tied to U.K. debt in particular faced the possibility of severe losses, according to analysts. The BOE stepped in to try to stop those losses from running out of control, analysts said.
The BOE’s move caused an immediate reaction in markets, but investors and economists said it was too soon to gauge how deep or widespread the damage was and whether the bank’s efforts would be enough to stabilize the situation.