The Bank of England has said it will step in to calm markets after the government’s tax-cutting plans sparked a fall in the pound and caused borrowing costs to surge.
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| Bank Of England. Photo: SkyNews |
It warned that if the market volatility continued there would be a “material risk to UK financial stability”.
The Bank will start buying government bonds at an “urgent pace” to help restore “orderly market conditions”.
The pound tumbled to $1.0589 after the news, down 1.3% against the dollar.
It comes after the currency hit a record low on Monday following the chancellor’s mini-budget.
The Bank of England has already said it will “not hesitate” to hike interest rates to try and protect the pound and try and stem surging prices. Some economists have predicted the Bank of England will raise the interest rate from the current 2.25% to 5.8% by next spring. BBC
