The Bank of England has today confirmed it is taking immediate action to protect the UK Gilt market as gilts yields rocket i.e., gilt capital values have fallen. What does this mean in plain English?
Comment
So that was the Bank of England’s stance, saying that they are trying to stabilise the gilt market. In addition, what QE also does is reduce gilts yields i.e., makes it cheaper for the government to borrow more money. This is ‘robbing Peter to pay Paul’.
The Bank of England has said it will continue this temporary QQ position from 28th September to 14th October 2022. This is when the Office for Budget Responsibility is due to issue its report to the Chancellor and we guess at that point decisions will also be made on further interest rate intervention despite the next Bank of England rate decision not due until 3rd November.