Will Bank of England have to step in again to mop up market mess?

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Bond buy-up seems to have been a sound bet, but ending intervention after two weeks is more of a gamble

The Bank of England governor, Andrew Bailey, with the chancellor, Kwasi Kwarteng, before a meeting of G7 finance ministers at the IMF in Washington.The Bank of England governor, Andrew Bailey, with the chancellor, Kwasi Kwarteng, before a meeting of G7 finance ministers at the IMF in Washington.Last modified on Fri 14 Oct 2022 08.34 BST

It is still unclear whether 14 days was long enough for the most at risk funds to shore up their cash reserves. When the bond market closing bell sounds at 4.30pm today, some of the weaker funds may face a cliff-edge.The Bank made two big bets when it stepped in to manage the market meltdown. First, that £65bn was enough to vacuum up UK bonds – known as gilts – being dumped on the market by pension funds.

That number has provided some comfort. It suggests that demand was low, or that the Bank had the luxury of turning away sellers who set prices too high, and therefore were not as desperate as they seemed.

 

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