Bank of England government bonds purchase overview:
- Who: The Bank of England has said it will begin buying government bonds following the announcement of a tax-cutting plan by new Prime Minister Liz Truss.
- Why: The Bank says it is going to start purchasing government bonds as a way to try and help calm down the markets after the government’s recent tax-cutting plan caused the pound to fall and borrowing costs to increase.
- Where: Consumers across the UK are affected.
The Bank of England has announced that it will begin buying government bonds in order to help calm down markets after its tax-cutting plan caused the pound to fall and an increase in borrowing costs.
The Bank said it will now begin buying government bonds at an “urgent pace” in order to prevent financial instability and re-establish “orderly market conditions,” reports BBC.
The pound fell to a record low last month after new Prime Minister Liz Truss announced a mini-budget plan that pledged $45 billion in tax cuts that would be funded by borrowing.
Investors have expressed concern over the government’s plan, however, and have responded by clamoring for higher interest rates in return for lending money to the government, reports BBC.
The long-term borrowing costs for the government dropped after the Bank of England announced its intentions last week, however the costs are reportedly still high.
Bank of England says it does not plan to increase interest rates prior to Nov. 3
The Bank of England has also announced that it does not intend to increase interest rates prior to when it makes its next announcement on policy that is scheduled for Nov. 3, reports Reuters.
The majority of economists reportedly polled by Reuters have said that they believe there is either a low or very low chance that the Bank will raise its interest rates prior to its announcement on Nov. 3.
The Bank of England teamed up with regulators The Financial Conduct Authority and the Prudential Regulation Authority in August 2020 in order to propose a new draft for their complaints scheme.
The new complaints scheme was promoted as being more user-friendly and designed in a way that would make it more accessible to firms and the public.
Have you been affected by market volatility following the government’s recently announced tax-cutting plan? Let us know in the comments!
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