Financial analysts predicted gilt prices would be a “rollercoaster” in the coming days 🔴 Charlie Bean, a deputy governor at the bank between 2008 and 2014, told theipaper: “The problem could take some time to fix”
Financial analysts predicted gilt prices would be a “rollercoaster” in the coming days as Andrew Bailey, the governor of the Bank of England ruled out extending intervention beyond Monday next week.: “The problem could take some time to fix.”
The Bank warned of a “material risk” to financial stability yesterday and said it would buy more government bonds to try to stem the ongoing sell off, before winding up its intervention. The Bank expanded its emergency buying to include £5 billion of inflation-linked debt, after previously announcing the purchase of £65 billion worth of longer-term Government bonds, known as gilts.
The move initially helped to calm the bond market and steady gilt yields, which determine the cost of Government borrowing. But a late sell-off yesterday saw yields on the standard 30-year UK government bond to 4.83 per cent – the highest level since the Bank began its emergency interventions last month.
Mr Bean, now a professor of economics at the London School of Economics, said: “What we are seeing may simply be a reflection of the market becoming concerned the intervention is about to end, or it may be something more fundamental or long-lasting.” Speaking at the International Monetary Fund’s annual meetings in Washington DC, the Bank’s Governor Andrew Bailey ruled out extending the intervention, arguing that the move had to be temporary for the Bank to retain credibility policy.
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