Bonds bailout aimed at stemming financial chaos has cost £3.7billion so far after fears the bill could top £65billion
- Bank of England’s bond market bailout looks set to cost far less than £65billion
- It pledged to buy up to £5billion worth of long-term UK bonds a day for 13 days
- But so far it has bought less than £3.7billion – with none purchased yesterday
The Bank of England’s bond market bailout looks set to cost far less than the £65billion it said it could spend when it dramatically intervened last week.
Officials pledged to buy up to £5billion worth of long-term UK bonds a day for 13 days in order to stem the chaos that had seen their price collapse.
But so far it has bought less than £3.7billion – with none purchased yesterday – out of the £25billion that it could have taken up so far.
The Bank stepped in after the price of 30-year bonds fell by half in just days following Chancellor Kwasi Kwarteng’s mini-Budget on September 23.
The Bank of England’s (pictured) bond market bailout looks set to cost far less than the £65billion it said it could spend when it dramatically intervened last week
The turmoil left some investment funds used by final salary pension schemes on the verge of collapse.
But the market has stabilised since the intervention, also helped by Mr Kwarteng ditching a controversial plan to scrap the 45p top tax rate.
Julian Jessop, an economist who advises Liz Truss, said the latest Bank of England update was ‘further evidence that the initial market turmoil is over’.
The pound, which fell to a record low against the dollar in the wake of the mini-Budget, has also bounced back.
Yesterday it climbed to $1.14, its highest level for nearly three weeks. It was sterling’s sixth day on the rise.
Market bets on UK interest rate rises also cooled. The pound is still down 15 per cent against the dollar this year
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