Pension Pain Hits the Bank of England: The Readout

Pension Pain Hits the Bank of England: The Readout

Hi, I’m Ruth David, Bloomberg’s deputy London bureau chief. Here’s today’s Readout.

How many interventions does it take to break a bank’s credibility?

It’s only Tuesday, and the Bank of England has already taken two unscripted actions to calm turbulent markets. Today it moved to avert what it warned could be a “fire sale” of inflation-linked gilts. That follows an intervention on Monday to expand the amount of gilts it could buy.

Tuesday’s move did indeed calm the bond markets. But investors and strategists remain in a tizzy about UK fiscal policy. “The BOE is clearly playing gilt selloff whack-a-mole,” Antoine Bouvet, senior rates strategist at ING, told Bloomberg, calling the series of “last-minute” policy announcements “unnerving for markets.”

One person who is backing the Bank is Chancellor of the Exchequer Kwasi Kwarteng — the man whose mini-Budget kicked off the whole show. Governor Andrew Bailey “is managing what is a global situation very effectively,” Kwarteng said in the House of Commons on Tuesday.

Subscribe to our In the City podcast on Apple or Spotify for a special edition on the the clash between fiscal policy and the UK bond markets.

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The government’s fiscal event just keeps on