The Bank of England has launched an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.
It is stepping in to buy gilts at an “urgent pace” after fears over the UK Government’s economic policies sent the pound tumbling and sparked a sell-off in the gilts market.
While the pound hit an all-time record low of 1.03 against the US dollar on Monday, the yield on 10-year gilts - which is a proxy for the effective interest rate on public borrowing - has also soared by the most in a five-year period since 1976.
