Bank of England’s fourth round of QE could still prove not enough to calm markets and be followed by an emergency interest rates hike
Things are moving fast in the financial markets. On Monday the governor of the Bank of England, Andrew Bailey, put out what he hoped would be a calming statement. Within 24 hours it was clear words alone were not going to be enough. There was evidence of a run on pension funds that was forcing them into a fire sale of their assets.
As a result, Threadneedle Street has been forced to step up its policy response. In a “whatever it takes” moment, the Bank said it would buy an unlimited amount of government gilts to stem the market panic. This represents a U-turn for an institution that less than a week ago pledged to start actively running down its stock of government bonds, but the Bank was left with no alternative.
