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Bank of England intervenes in bond markets again, warns of ‘material risk’ to UK financial stability

The Bank of England raised rates by 0.5 percentage points Thursday.
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LONDON — The Bank of England on Tuesday announced an expansion of its emergency bond buying operation as it looks to restore order to the country’s chaotic bond market.

“The Bank is announcing today that it will widen the scope of its daily gilt purchase operations also to include purchases of index-linked gilts,” the central bank said in a statement Tuesday.

“This enhancement to our operations will be in effect from 11 October 2022 until 14 October 2022 alongside the Bank’s existing daily conventional gilt purchase auctions.”

Index-linked gilts are bonds where payouts to bondholders are benchmarked in line with the U.K. retail price index.

The move marks the second expansion of the Bank’s extraordinary package in as many days, after it increased the limit for its daily purchases on Monday ahead of the planned end of the purchase scheme on Friday.

The Bank launched its emergency intervention on Sep. 28 after an unprecedented sell-off in long-dated U.K. government bonds — known as “gilts” — threatened to collapse multiple pension funds.

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