AGL 38.50 Increased By ▲ 0.93 (2.48%)
AIRLINK 131.50 Decreased By ▼ -1.00 (-0.75%)
BOP 5.60 Decreased By ▼ -0.04 (-0.71%)
CNERGY 3.83 Increased By ▲ 0.06 (1.59%)
DCL 8.60 Decreased By ▼ -0.27 (-3.04%)
DFML 40.80 Decreased By ▼ -0.20 (-0.49%)
DGKC 89.05 Decreased By ▼ -1.11 (-1.23%)
FCCL 35.26 Increased By ▲ 0.18 (0.51%)
FFBL 66.45 Decreased By ▼ -0.05 (-0.08%)
FFL 10.45 Increased By ▲ 0.30 (2.96%)
HUBC 109.45 Increased By ▲ 3.05 (2.87%)
HUMNL 14.66 Increased By ▲ 1.26 (9.4%)
KEL 4.82 Decreased By ▼ -0.04 (-0.82%)
KOSM 7.05 Increased By ▲ 0.20 (2.92%)
MLCF 42.23 Increased By ▲ 0.43 (1.03%)
NBP 59.06 Increased By ▲ 0.48 (0.82%)
OGDC 184.00 Increased By ▲ 2.75 (1.52%)
PAEL 25.55 Decreased By ▼ -0.15 (-0.58%)
PIBTL 5.91 Increased By ▲ 0.08 (1.37%)
PPL 147.50 Decreased By ▼ -0.90 (-0.61%)
PRL 23.45 Increased By ▲ 0.23 (0.99%)
PTC 16.57 Increased By ▲ 1.33 (8.73%)
SEARL 69.20 Increased By ▲ 0.41 (0.6%)
TELE 7.24 No Change ▼ 0.00 (0%)
TOMCL 35.75 Decreased By ▼ -0.25 (-0.69%)
TPLP 7.57 Increased By ▲ 0.17 (2.3%)
TREET 14.15 Decreased By ▼ -0.09 (-0.63%)
TRG 50.75 Decreased By ▼ -0.10 (-0.2%)
UNITY 26.83 Increased By ▲ 0.43 (1.63%)
WTL 1.22 Increased By ▲ 0.01 (0.83%)
BR100 9,805 Increased By 37.5 (0.38%)
BR30 29,768 Increased By 367.7 (1.25%)
KSE100 92,265 Increased By 327.4 (0.36%)
KSE30 28,806 Increased By 61.9 (0.22%)

LONDON: The Bank of England sought to quell the fire-storm in Britain’s bond markets, saying it would buy as much government debt as needed to restore order after new Prime Minister Liz Truss’s tax cutting plans triggered financial chaos.

Having failed to cool the sell-off with verbal interventions over the previous two days, the British central bank announced on Wednesday the immediate launch of an emergency bond-buying programme aimed at preventing the market turmoil from spreading.

“Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability,” the BoE warned.

Since finance minister Kwasi Kwarteng outlined a plan on Friday for tax cuts on top of an energy bill bailout, all funded by a huge increase in government borrowing, UK mortgage markets have frozen, pension funds have dumped gilts and corporate borrowing costs have leapt.

One source at the Treasury said Kwarteng would not resign, and the government would not reverse its policy. A second person familiar with the situation said Truss still backed Kwarteng and they would announce further economic reforms soon.

The BoE will now buy up to 5 billion pounds ($5.31 billion) a day of British government bonds of at least 20 years’ maturity starting on Wednesday and running until Oct. 14.

Its announcement, which represented a sudden reversal of plans to sell bonds it had amassed since the global financial crisis of 2008-9, immediately pushed down borrowing costs.

The 30-year gilt yield was set for its biggest drop in records going back to 1992. The pound pared earlier losses to rise against the dollar. At $1.0860, it was up 1.2% on the day and down 11% in the last three months.

The BoE said it would return to its plan to sell bonds at the end of October.

Comments

Comments are closed.