- The British pound rose on Thursday in volatile trade as investors awaited the impending deadline for the Bank of England (BoE) to end an emergency bond-buying program.
- Bond yields rose so far and so fast that the funds’ risk insurance products were demanding huge amounts of cash, reportedly about £320 billion, forcing pension funds into a fire sale of bonds.
- The problem is that, on one hand, the BoE is obliged to slow the economy by tightening monetary policy to tame inflation and is now simultaneously also forced to buy bonds to avoid a market collapse which is putting more cash into the system, thus increasing the need to raise interest rates even higher.
UK bond crisis: Bank of England dragged into PM Liz Truss’ fiscal mess 14.10.2022
