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Bank of England governor confirms emergency intervention will end on Friday

The Bank of England governor, Andrew Bailey, has delivered a surprisingly blunt message to financial markets saying it will stop…

By financial2020myday , in Economy , at October 12, 2022

The Bank of England governor, Andrew Bailey, has delivered a surprisingly blunt message to financial markets saying it will stop buying bonds to help pension funds this week despite pleas to continue.

The emergency bond-buying programme aimed at stabilising their price and preventing a sell-off that could put some pension schemes at risk of collapse is due to end on Friday.

Speaking in Washington Bailey delivered a stark message “You’ve got three days left now and you’ve got to sort it out.”

“I’m afraid this has to be done, for the sake of financial stability,” he later told the BBC.

The pound fell against the dollar to below $1.10 after Bailey’s statement which dashed investor hopes of the support being extended.

But in a sign that not everyone is singing from the same hymn sheet in Threadneedle Street the Financial Times reported that the Bank was privately reassuring lenders that it was prepared to extend its emergency bond-buying programme beyond Friday’s deadline if market conditions demanded it, citing three sources.
Analysts were left perplexed by the statement.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank said: “All the BoE efforts have gone up in smoke. What Bailey did was certainly one of the biggest communication mistakes that a central banker could make. And it really came at an unfortunate time.”

Former pensions minister Steve Webb, who now works for pension consultants LCP, said he thought Mr Bailey may have to extend the help: “It’s not a fantastically good thing for pension funds to be furiously selling assets over a two-week period, so it’s perfectly possible, although a lot has been done, that more help will be needed from the Bank on Friday,” he told BBC Radio 4’s The World Tonight, adding: “We are in uncharted territory.”

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