BOE pledge for unlimited purchases sends U.K. gilt yields below 14-year highs
U.K. gilt yields fell back from their highest in 14 years after the Bank of England said it would buy bonds at “whatever scale is necessary” to restore orderly market conditions.
Earlier on Wednesday the yield had risen to 4.6%, up more than 120 basis points in just four trading days as investors dumped government bonds in response to what they demed a dangerously profligate budget by new finance minister Kwasi Kwarteng. “Given elevated inflation pressures in many countries, including the U.K., we do not recommend large and untargeted fiscal packages at this juncture,” the IMF said. “It is important that fiscal policy does not work at cross purposes to monetary policy.”
“The Bank is monitoring developments in financial markets very closely in light of the significant repricing of UK and global financial assets,” said the BoE in a statement.
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