Bank of England flags concerns about ‘material risk’ to UK financial stability

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London: In addition to warning of threats to the country’s financial stability, the Bank of England on Tuesday unveiled other measures to calm markets shaken by the British budget.

The BoE and the UK government have already taken steps to calm the markets this week.

The move comes after the pound fell to a record low against the dollar and UK bond yields soared when new prime minister Liz Truss unveiled debt-fueled tax cuts in the budget last month.

The central bank announced on Tuesday that it would extend its daily purchases of British government bonds until Friday, a day after launching a temporary tool to ease liquidity constraints.

The BoE said in a statement that the further move would “serve as an additional safeguard to restore orderly market conditions”.

From now on, the central bank will buy index-linked jogs as part of the wider operation of bond purchases, and it was highlighted that “the beginning of the week witnessed further significant repricing of the UK’s public debt, with particular regard to index-linked jogs”.

“Market disruptions and self-reinforcing ‘fire sale’ dynamics pose significant risks to UK financial stability,” he added.

Among the positive news was official data on Tuesday which showed Britain’s unemployment rate fell to 3.5%, a nearly 50-year low.

However, rising inflation is constantly eating up wages.

To avoid further spooking the markets, the British government raised some key economic estimates for Halloween on Monday.

Finance Minister Kwasi Kwarteng will present debt reduction proposals and independent economic forecasts on October 31 instead of the end of November.

It comes after Finance Minister Kwarteng was already forced to scrap tax relief for the richest earners amid the uproar as millions of Britons face a livelihood crisis while UK inflation hovers around 10%.



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