The Financial institution of England’s determination Wednesday to purchase British bonds is being portrayed as a rebuke to new Prime Minister Liz Truss’s financial program, and BOE Governor Andrew Bailey might have meant it to be. The intervention calmed bond and fairness markets, no less than for now, although at the price of displaying once more that central bankers are simply spooked into rescue mode.
Traders are cheering their success in coaxing the Financial institution of England again into the market to underwrite bond costs. On Monday the BOE issued a press release saying it could consider market actions “at its subsequent scheduled assembly,” which is in November. Two days later it had forgotten all that and mentioned it could “perform short-term purchases” of longer-term gilts “to revive orderly market circumstances.”
