The Bank of England on Tuesday expanded its efforts to stabilize the bond market to include inflation-linked bonds amid continuing concerns about the government’s budget.
The purchases were broadened to include index-linked bonds after yields on government bonds jumped again on Monday, returning to the levels reached immediately after the government on Sept. 23 announced £45-billion of unfunded tax cuts. Bond yields tend to rise as risk increases because they represent the annual return investors demand to loan money to the government.