The Bank of England has staged its second emergency intervention in as many days, as financial institutions step up calls for it to prolong its bond-buying programme to shore up the British pension system.
The BoE widened its £65bn gilts purchasing programme to include inflation-linked bonds in its latest attempt to stem “fire sales” by pension funds that have created a “material risk to UK financial stability”.
Tuesday’s move, the first time the BoE has purchased index-linked debt, initially helped steady gilt markets on a day when the IMF reiterated its doubts about UK economic prospects. It followed the BoE’s increase on Monday of the programme’s daily maximum purchase level to £10bn.
