The Bank of England (BoE) has stepped up its intervention in gilt markets with the announcement it will buy index-linked gilts.
In an announcement this morning (11 October) the bank said it will “widen the scope of its daily gilt purchase operations”.
It described the decision to purchase index-linked gilts as an “enhancement” of its operations to calm markets.
These were unsettled during the mini budget on 23 September when the government revealed unfunded tax cuts.
Sterling crashed to its lowest level in decades and gilt yields surged making it more expensive for the government to borrow money.
The government received widespread criticism for not publishing an Office for Budget Responsibility (OBR) forecast as part of the mini budget.
In the announcement today the BoE added: “These additional operations will act as a further backstop to restore orderly market conditions by temporarily absorbing selling of index-linked gilts in excess of market intermediation capacity.
“As with the conventional gilt purchase operations, these additional index-linked gilt…
