The Bank of England (BoE) has announced that it will temporarily purchase long-dated UK government bonds in an effort to stabilize the plummeting pound. This emergency intervention comes in response to significant volatility in the financial markets following the government’s recent fiscal policy announcements.

The BoE’s statement emphasized the need to restore orderly market conditions and reduce any risks to the UK’s financial stability. The central bank expressed concern about the potential for dysfunction in the gilt market, which could lead to a tightening of financing conditions and a reduction in the flow of credit to the real economy.

Key aspects of the intervention include:

• Temporary purchases of long-dated UK government bonds.
• The operation will be fully indemnified by HM Treasury.
• Auctions will be held daily.
• The purchases are designed to be temporary and will be unwound in a smooth and orderly manner once the market has stabilized.

Market analysts are closely watching the BoE’s actions and their impact on the pound and broader financial markets. The effectiveness of this intervention will be crucial in determining the UK’s economic outlook in the coming months.