Analysis: Don’t confuse symptoms with causes, the Bank’s hand was forced September 28, 2022 Today’s emergency Bank of England support package for the City was triggered by turmoil in a very specific segment of the gilt market. Since last Friday’s tax cutting and borrowing bonanza, rates on UK government debt have been going through the roof. That has pushed bond prices down. The two move inversely. That, in turn, [...]
Government has a second chance – it can’t fluff its lines yet again September 28, 2022 The UK Economy: Apocalypse Now? Black Wednesday, Mark 2? Not quite. But if social media’s hot takes on the state of the UK economy are wide of the mark, the pressure on Kwasi Kwarteng and the Bank to restore credibility is now immense. The good news is that will not be as difficult as some [...]
Explainer: Why has the Bank of England intervened in financial markets? September 28, 2022 The Bank of England today has stepped into financial markets to try to tame the surge in UK borrowing costs. This morning, it said it will launch a temporary bond buying programme lasting from today to 14 October. The package will be unlimited in scale and will target long-dated UK debt. It is similar to [...]
City minister says government not at fault for markets turmoil September 28, 2022 City minister Andrew Griffith has said the past week’s financial markets turmoil is not the government’s fault as a Tory backlash against the Prime Minister builds. Griffith told Sky news that “every major economy is dealing” with market volatility, after the Bank of England made a stunning decision today to start buying up UK gilts [...]
Kwarteng tells bank execs he is ‘working closely’ with BoE to calm markets September 28, 2022 Kwasi Kwarteng has told a group of investment bank executives that he is “working closely” with the Bank of England to calm markets. The chancellor and City minister Andrew Griffith said during a roundtable that the government has a “clear commitment to fiscal discipline” and outlined coming post-Brexit changes to financial services regulations, according to [...]
Rates on UK debt surge higher and pound slumps against US dollar September 28, 2022 Rates on UK debt surged higher today and the pound trailed the US dollar again driven by investors sweating over the government’s tax and borrowing splurge. The yield on the 30-year UK gilt jumped six basis points to 5.048 per cent, the highest since 1998. Investors were demanding a greater return ahead of the government [...]
Bank of England chief economist warns of ‘significant’ response to market turmoil September 27, 2022 The Bank of England’s chief economist today rushed to calm the City by promising a “significant” response to the UK market turmoil. Huw Pill said it is hard “not to conclude” the Bank must hike interest rates steeply at its next meeting on 3 November after markets were rocked by chancellor Kwasi Kwarteng’s tax cuts and [...]
IMF “monitoring developments” in UK after currency fall and mini-budget September 27, 2022 The International Monetary Fund gave Kwasi Kwarteng and Liz Truss a slap on the wrist this evening, with a spokesman saying it did not “recommend large and untargeted fiscal packages” amid inflation concerns. The warning from the IMF comes after another day of currency fluctuations, triggered by a so-called ‘mini budget’ of tax cuts announced [...]
London’s FTSE 100 dragged down by house builders as more rate hikes loom September 27, 2022 London’s FTSE 100 fell today driven lower by house builders tumbling on the prospect of higher interest rates. The capital’s premier index lost 0.52 per cent to drop to below 7,000 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, tumbled 2.36 per cent to [...]
House prices may tumble a fifth if Bank of England hikes rates steeply, economists warn September 27, 2022 House prices could tumble as much as 21 per cent if the Bank of England is forced to hike interest rates steeply in response to the government’s tax and borrowing splurge fuelling inflation, City economists have warned. Mortgage affordability – the ratio of a home purchase loan to the size of the borrower’s income – [...]