The Bank of England’s move to step in and calm the chaos in financial markets follows turmoil for the pound and UK government bonds caused by the Chancellor’s tax-cutting mini-budget. The Bank intervened to try to bring surging yields in government bonds – known as gilts – under control as they spiralled higher, sending UK public borrowing costs soaring.
It said it would buy bonds “on whatever scale is necessary”, but has so far resisted calls to deliver an emergency interest rate rise after the pound fell to an all-time record low against the US dollar on Monday. Here we look at the reasons behind the Bank’s emergency bond-buying action and what it means for households and businesses:
