“Be more forceful”: that’s the message to the Bank of England from the financial community, convinced that only massive policy-tightening to lift rates above those of the Federal Reserve, will stabilize the pound.
The BoE acted on Wednesday to staunch the bond selloff, announcing a plan to buy long-dated notes. While that fueled a record rally in 30-year gilts, the impact to the pound was less clear, with the currency whipsawing but still holding onto the more-than-5% drop against the dollar since Friday’s tax-cut announcements.
For analysts, the bond-buying scheme may not let the bank off the rate-hike hook and some financial experts are still calling for an emergency intra-meeting rate hike to support the pound. They also say the central bank needs to take bolder steps after the government’s unfunded tax cuts and the subsequent gilt market blowup harmed officials’ credibility in fighting inflation.
