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Re: Liz Truss [Prime Minister]
The "mini fiscal event" - the gift that keeps on giving…
https://www.bbc.co.uk/news/business-...5Bpost+type%5D
Quote:
Bank of England in fresh emergency move to calm markets
The Bank of England has warned of a "material risk" to financial stability as it made a fresh emergency move to try to calm markets.
It said it would buy more government bonds to try to stabilise the price and prevent a sell-off that could put some pension funds at risk of collapse.
It has made multiple interventions in markets since the government's mini-budget spooked investors.
The chancellor promised huge tax cuts without saying how he would fund them.
On Monday, he brought forward his plan to balance the government's finances by three weeks to 31 October in a bid to reassure the markets…
… Explaining its intervention on Tuesday, the Bank of England said government bonds had seen a "significant re-pricing" since the start of the week and warned there was a risk of a fresh downturn in markets.
It said it would now buy a wider range of bonds as well as continue to buy bonds as part of the original emergency measures it launched on 28 September.
"A material risk to UK financial stability" are words the Bank of England uses rarely. It's even more rare for several senior Bank executives to have indicated part of the blame for the turmoil may lie at the government's door, the result of domestic policy.
They're not alone. The sharp rise in the cost of new government borrowing - the interest on those bonds - reflects an anxiety amongst investors that its tax-cutting plans risk the UK overstretching itself. And it's pensions funds and borrowers who are hit by the fallout.
It's the Bank who - again, a rare event - had to try to ease their pain. But it's made it clear that the medicine is a stop gap - and the lingering unease in the market emphasises it's ultimately looking to what it sees as the source of its unease - the chancellor's approach - for a remedy.
Resolving this crisis of faith will ultimately depend on what the chancellor unveils in his Hallowe'en plan. If the IFS is right, the price of restoring credibility could involve upwards of £60bn worth of cuts to public spending.
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update
https://twitter.com/jrmaidment/statu...mUQzgbBGowDpgw
Quote:
Downing Street said Cabinet did not discuss the Bank of England's latest big economic intervention this morning.
The Bank warned at 7am that a sell-off in the UK govt bond market posed a “material risk to UK financial stability”.
Was not brought up at main Cabinet meeting.
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Well, that should restore the Markets' confidence...
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Last edited by Hugh; 11-10-2022 at 12:44.
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