On Monday, the monetary entity announced new support measuresamong them the extension of the maximum size of daily public debt purchases up to 10,000 million pounds. But, despite this extension, the “dysfunction” continued in particular in the market of indexed bills posing “a significant risk to the financial stability of the UK”noted the Bank of England on Tuesday to justify the new extension.
central bank intervention to calm the public debt market, which was at risk of a liquidity crisis and threatened to spread to credit conditions for households and companies, runs until fridayas previously announced.
The operations revealed on Tuesday “will serve as an additional safety net to restore orderly market conditions”assured the institution. Purchases will focus mainly on long term uk treasury bond derivative funds (LDI), some of which were in danger of collapsing due to a sudden collapse in the value of long-term Treasury bonds.
The BoE announced on Monday that so far it had only purchased 5 billion pound bonds.
Following the announcement by Truss and his finance minister, Kwase Kwarteng, which triggered the fall of the pound, the minister added on Monday that he was bringing forward the publication of his budget forecasts to October 31, instead of the November 23 initially planned. Y on Tuesday afternoon he must appear before the House of Commons.
The new conservative executive also will publish medium-term measures to ensure that UK public finances remain on a sustainable path.
The government’s austerity announcements had also been received with discomfort by the population, who took to the streets to protest for greater actions to contain inflation that adds pressure on the cost of living, in particular due to increases in the Energy. The Government had to review its economic measures after the effect unleashed and the warning from international organizations about the possible effects it would have on the activity.
But all this did not seem to reassure investors: the interest of the public debt to 30 years increased throughout the session on Monday, reaching +4.68% at the end of the session, illustrating the lack of confidence in British debt.
Source: Ambito
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