Horror as Sterling nosedives after Bailey claims BoE will pull plug

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The pound has taken another tumble after Bank of England governor Andrew Bailey said he would pull the plug on the £65billion bond-buying programme that has helped to calm the markets, by the end of the week. Sterling fell by 1.3 percent to $1.10 following the announcement. However, the Financial Times has reported that the Bank of England has signalled privately to investors that it could prolong bond purchases past this Friday’s deadline. A number of bankers briefed by the BoE have said that officials are waiting to see whether so-called liability-driven investment managers, which help pension funds manage risks in their portfolios, have had enough time to build up enough cash reserves to enable their clients to meet margin calls.

The BoE was forced to intervene two weeks ago to buy government bonds to help pension schemes that have suffered since the announcement of Kwasi Kwarteng’s budget on September 23. 

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‘Not the BoE’s job to bail out pension funds’, says expert

It is not the Bank of England’s job to bail out pension schemes, a former Treasury official has said, after the bank’s governor, Andrew Bailey said support would be withdrawn by the end of the week. 

However, Nick Macpherson said that it is likely that the government will be working on its own support scheme. 

Writing on Twitter, he said: “It is not the Bank of England’s job to bail out pension funds. But history suggests it’s a job the government will take on and it will be working on a scheme right now.

“Sadly, this can only add to the state’s liabilities and to upward pressure on interest rates.”

Horror as Sterling nosedives after Bailey claims BoE will pull plug on support

The pound has taken another tumble after Bank of England governor Andrew Bailey said he would pull the plug on the £65billion bond-buying programme that has helped to calm the markets, by the end of the week. Sterling fell by 1.3 percent to $1.10 following the announcement.

However, the Financial Times has reported that the Bank of England has signalled privately to investors that it could prolong bond purchases past this Friday’s deadline.

A number of bankers briefed by the BoE have said that officials are waiting to see whether so-called liability-driven investment managers, which help pension funds manage risks in their portfolios, have had enough time to build up enough cash reserves to enable their clients to meet margin calls.

The BoE was forced to intervene two weeks ago to buy government bonds to help pension schemes that have suffered since the announcement of Kwasi Kwarteng’s budget on September 23. 

Good morning

Good morning, I’m Olivia Stringer and I’ll be bringing you all the latest developments on the pound for the next eight hours. Please feel free to get in touch with me as I work if you have a story or tips to share! Your thoughts are always welcome.

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Twitter: @Livstringer_

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