Pound falls sharply against dollar after Bank confirms bond-buying end date
The pound has fallen sharply against the dollar after Andrew Bailey warned the Bank of England would not extend its emergency intervention in financial markets beyond this week, after the turmoil sparked by the government’s mini budget.
Sterling skidded by more than a cent against the dollar to below $1.10 after the Bank’s governor insisted the £65bn scheme to purchase UK government bonds would not be continued beyond the deadline on Friday.
Pensions industry leaders and one of the Bank’s former deputy governors had earlier called for an extension to mop up the ongoing bond market fallout triggered by Kwasi Kwarteng’s ill-received mini budget last month.
The central bank had started the day by saying it would revamp the scheme’s bond-buying firepower – within the existing timeframe – for a second time in as many days, warning there were still “material risks” in government debt markets affecting UK pension funds.
However, it ended with Bailey saying the intervention must end this week, telling an event organised by the Institute of International Finance in Washington: “We have announced that we will be out by the end of this week. We think the rebalancing must be done.
“My message to the funds involved and all the firms involved managing those funds: You’ve got three days left now. You’ve got to get this done.”
It comes after the International Monetary Fund added to pressure on Liz Truss’ government to U-turn on unfunded tax cuts announced in last month’s mini-budget, saying changes in policy would help calm jittery financial markets.
The Washington-based IMF said a shift in policy from Truss and her chancellor would “change the trajectory” of interest rates.
The IMF said the Bank and the Treasury were “like two people trying to
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