Commentary If you follow the markets, you have probably heard about the recent financial carnage in Great Britain and the forecasted doom in the United States. While the United Kingdom is a smaller country than the United States, generally speaking the United Kingdom has one of the most profound financial systems in the developed world….
Financial Turmoil in Western Markets
October 17, 2022
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Bank of England Governor Warns of Higher-Than-Expected Interest Rate Hike
Bank of England (BoE) Governor Andrew Bailey on Saturday suggested the central bank may set interest rates higher than previously expected next month. Giving a speech at the Group of Thirty’s annual International Banking Seminar in Washington, Bailey said the bank “will not hesitate to raise interest rates to meet the inflation target.” “And, as things…
UK Borrowing Costs Rise as Bank of England’s Bond-Buying Programme Nears End
The cost of UK government borrowing rose again on Wednesday as the Bank of England (BoE) confirms it will stop buying gilts on Friday as previously announced. The 20-year gilt yield—the return investors get from UK government bonds—rose above 5 percent for the first time since Sept. 28, and the 30-year gilt yield also passed…
Bank of England Explands Bond-Buying Program to Include Inflation-Linked Bonds
The Bank of England (BoE) on Tuesday ramped up its intervention in the gilt market by including index-linked gilts in its emergency purchasing programme, citing market dysfunction which it says poses a “material risk” to the UK’s financial stability. Deputy Prime Minister Therese Coffey said she’s “absolutely confident” pensions are safe despite the central bank’s warning,…
Bank of England Doubles Bond Buying Limit
The Bank of England (BoE) will double the amount of government bonds it can buy daily before the buy-back programme ends on Friday, the central bank said on Monday. Between Monday and Friday, the bank will offer to buy up to £10 billion ($11 billion) of gilts per day, up from the previous limit of £5…
When Will the Fed Blink?
October 4, 2022
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Commentary Let’s understand the significance of the Bank of England’s announcement that it would start buying $65 billion in UK public debt. It represents an about-face on the previous policy of using central bank power to sop up excess liquidity in hopes of getting inflation under control. It’s like crossing a river halfway and then…
Tax-Cutting Plan Is ‘Urgent Action’ Needed to Get UK Economy Growing: Truss
UK Prime Minister Liz Truss has defended the government’s tax-cutting plan which has led to turmoil in the financial markets, calling it an “urgent action” needed to get the economy growing. Chancellor Kwasi Kwarteng on Sept. 23 unveiled the biggest package of tax cuts in half a century, which was aimed at spurring growth in…
Bank of England Intervenes to Calm Markets as UK Borrowing Costs Soar
September 28, 2022
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The Bank of England, Britain’s central bank, has sought to restore financial stability with an emergency bond-buying programme, after the government’s new fiscal policy caused the pound to dive and borrowing costs to soar. The British pound on Monday plunged by more than 4 percent to just $1.03, an all-time low. It recovered to about…
UK Central Bank Raises Interest Rates to 2.25 Percent, Highest Since 2008
September 22, 2022
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The Bank of England, the UK’s central bank, has announced it will raise interest rates to their highest in more than 13 years and indicated it believes the economy is already in recession. The Bank’s Monetary Policy Committee (MPC) has raised rates from 1.75 to 2.25 percent—the highest since November 2008—in an effort to control…
Truss Insists UK Recession Not Inevitable as Sunak Warns She Will Make Things Worse
The Bank of England’s prediction that the UK is heading into recession has yet again brought the next government’s fiscal policy into sharp focus during Thursday’s Conservative leadership debate. Liz Truss said a recession can be avoided by cutting taxes and attracting investment, while Rishi Sunak said his opponent’s plan will “put fuel on the…
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