The Bank of England is set to stop their government bond-buying scheme today after intervening on behalf of the UK\u2019s financial markets.<\/p>\n\n\n\n
The pressure on gilts \u2013 UK government bonds \u2013 eased yesterday following an increased market sentiment encouraged through Bank of England bond-buying activity.<\/p>\n\n\n\n
It promised to buy up to \u00a365bn in government bonds from those who wanted to sell them but has steadied the market enough through total bond buying of \u00a317.8bn.<\/p>\n\n\n\n
Governments sell bonds to banks and investors to increase public spending, which on Wednesday had yields as high as 5.1%, and investors reap annual profit from these and have their initial investment returned once the bond expires.<\/p>\n\n\n\n
Fundamentally, the Bank of England\u2019s action has helped prop up pension funds at a time when there is global strain on financial pressures.<\/p>\n\n\n\n
The rate (and price) at which bonds are sold depends on confidence that the Government will be able to repay their debt once a bond matures.<\/p>\n\n\n\n
However, with growing concerns amidst the cost-of-living crisis, and confidence in the UK economy extremely low, bond prices have fallen also.<\/p>\n\n\n\n
Chancellor Kwasi Kwarteng and Prime Minister Liz Truss are now under pressure to reinstate a planned increase in corporation tax, soothing the markets and responding to public backlash.<\/p>\n","protected":false},"excerpt":{"rendered":"
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