The Bank of England took emergency action on Wednesday to stem a crisis in government debt markets, suspending its programme to sell gilts and instead pledging to buy long-dated bonds.
The central bank warned of a “material risk to UK financial stability” from the turmoil in the UK government bond market that has followed chancellor Kwasi Kwarteng’s tax cuts and borrowing plan. It also raised the prospect of a “tightening of financing conditions and a reduction of the flow of credit to the real economy”.
UK government bond markets recovered sharply after the announcement but the pound fell, down 0.8 per cent against the dollar in afternoon trading on Wednesday in London to $1.064.
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