The Bank of England has said that its intervention last month in the gilt market prevented a “self-reinforcing spiral” following Kwasi Kwarteng’s mini-Budget which could have wiped out the value of a large number of funds held by pension companies.
In a letter to the House of Commons Treasury Committee setting out the thinking behind the dramatic 28 September move, the Bank’s deputy governor for financial stability Sir Jon Cunliffe said that soaring gilt prices could have triggered “widespread financial instability”.
