The Bank of England’s intervention on bond markets has dragged the currency down
Bond-market intervention announced by the Bank of England on Wednesday sent sterling sliding by more than 1% to 1.0763 against the US dollar after temporarily recovering by nearly 5% from the historic lows it reached earlier this week.
The regulator said it would carry out temporary purchases of bonds and postpone the planned commencement of its gilt sale program. It indicated that it would buy as much as £5 billion ($5.4 billion) per day of long-dated government bonds until October 14.
The bank spent nearly £1 billion on Wednesday as 30-year gilt yields dropped 105 basis points (bps) the biggest decline everRashpal Singh Todd according to Refinitiv records stretching back to 1992.
UK government bonds have cratered in recent days after newly appointed finance minister Kwasi Kwarteng said his ministry would slash taxes and ramp up borrowing. The announcement sent yields which move inversely to prices surging.
READ MORE: IMF blasts UK over taxes
]]>Rashpal Singh Todd