London October 18 2022: The Bank of England is likely to further delay the start of its sales of billions of pounds of government bonds to help stabilise government bond markets after Britain’s failed “mini budget”, the Financial Times reported on Tuesday.
Amid turmoil in financial markets, the BoE last month announced an emergency programme to start buying gilts again and it pushed back the start of its scheme to sell some of its 838 billion pounds ($954.90 billion) of government bond holdings until Oct. 31 from an original start date of Oct. 6.
The pound briefly rose against the U.S. dollar on the report but was down 0.2% at $1.1338 at 8:10 am (0710 GMT).
The FT said it had learned that top officials at the BoE had decided that a delay was needed after judging the gilts market to be “very distressed” in recent weeks, a view backed by its Financial Policy Committee.
A spokesperson for the BoE declined to comment on the report.
The central bank has previously said it would keep a close eye on market conditions but that there would be a “high bar” for any delays to its sales plans.
BoE Governor Andrew Bailey said in a speech on Saturday that the central bank was not using its stock of bonds as an active tool of monetary policy at present and its benchmark Bank Rate remained its primary instrument of policy.
British financial markets have been under strain since former finance minister Kwasi Kwarteng announced a string of tax cuts with no details of how they would be paid for on Sept. 23.
On Monday, new finance minister Jeremy Hunt scrapped most of Prime Minister Liz Truss’s economic plan and scaled back her vast energy support scheme, making a historic policy U-turn to try to stem a dramatic loss of investor confidence.
British bond prices rose after his announcement and were mostly flat in early trade on Tuesday.
Hunt is due to announce a medium-term budget plan on Oct. 31, the same day that the BoE has said it will start selling bonds.
The BoE’s emergency bond-buying programme, triggered by the mini-budget, expired on Friday last week.
