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The markets are braced for more turmoil after the head of the Bank of England sent the pound plunging by telling pension funds they have until Friday to balance their books before emergency support for the bond market is removed.
Andrew Bailey, the governor of the central bank, faced a fierce backlash last night after he warned those managing the pensions of millions of people in the UK that they have ‘three days left’ to sort out their finances.
The Bank had been supporting the country’s bond market in recent weeks after investors were spooked by the Chancellor Kwasi Kwarteng’s ‘mini-budget’ last month, injecting £65billion to stop it crashing.
However, it has declined to extend this support beyond Friday, October 14, a decision that sparked more chaos last night and is set to provide stormy conditions as the market opens this morning.
Speaking at an event organised by the Institute of International Finance in Washington today, Mr Bailey said there is no plan to help stricken pension funds — which are scrambling to raise an estimated £320billion — beyond this week.
He said: ‘We have announced that we will be out by the end of this week.We think the re-balancing must be done.
‘And my message to the funds involved and all the firms involved managing those funds: You’ve got three days left now. You’ve got to get this done.’
That’s despite calls from one pension industry body for the support to be continued until at least the end of the month ‘and possibly beyond’.
The Pensions and Lifetime Savings Association said it was ‘a key concern of pension funds since the Bank of England’s intervention has been that the period of purchasing should not be ended too soon’.
Following the announcement by the governor, the pound plunged below $1.10 for the first time in weeks, dropping from 1.1178 to 1.0953 overnight.
This came after the Bank beefed up its earlier intervention by extending the range of bonds it will buy to include index-linked gilts — as it battled to stop a ‘fire sale’ that it said posed a ‘material risk to UK financial stability’.
The value of the pound against the US dollar has plummeted this evening after the Bank of England’s announcement that it will end emergency support for 바카라사이트 pension funds on Friday
Andrew Bailey (pictured), Governor of the Bank of England, has told pension funds to balance their books before Friday
The support for the bond market has been put in place after Chancellor Kwasi Kwarteng’s mini-Budget sent the gilt market into a tailspin and wreaked havoc on final salary pension funds (Mr Kwarteng yesterday)
The Bank of England has injected £65billion into the gilt market since the Chancellor’s mini-budget last month in an effort to avoid it crashing
<div class="art-ins mol-factbox news halfRHS" data-version="2" id="mol-70e3c870-499e-11ed-8eb6-892c5e1a986f" website market turmoil after Bank Of England boss sent pound plunging