Summary
Time to wrap up – here’s our main stories so far:
Bailey: Bank of England didn't oust Liz Truss
Q: Did the Bank of England oust Liz Truss, as Narayana Kocherlakota, the former Federal Reserve Bank of Minneapolis claimed last month?
Kocherlakota argued that the Bank’s decision not to extend its support for the bond market contributed to Truss’s political demise.
Governor Andrew Bailey insists that Kocherlakota’s case is built on a ‘false premise’, for three reasons.
First, Bailey says the Bank’s pledge to buy UK government bonds created a “serious moral hazard problem”.
Unless the Bank could credibly end the programme quickly, it would have been stuck buying gilts for a long time, he says.
Second, the Bank was confident the problems in the gilt market would be resolved by its deadline.
Thirdly, the Bank couldn’t credibly be buying huge amounts of government debt at a time when it was trying to unwind its massive stock of bonds bought under QE.
Speaking with some passion (for a central banker, anyway), Bailey insists:
We did not bring the government down, we did a limited operation for financial stability purposes and we did exactly the right thing and ended it promptly.
