We can expect the Bank of England to be busy for a while

The scale of the panic in what is more normally one of the City’s calmer backwaters is actually quite startling, says James Moore

The Bank of England (PA)

So, the Bank of England is moving ahead with selling £80bn of UK government bonds from 1 November, a day later than originally announced, to avoid a clash with the government setting out its debt-cutting plan.

With inflation booming, the Bank’s planned sales serve as a secondary means of cooling prices, alongside raising interest rates. It currently has £838bn of government IOUs on its books, dating from 2009. The portfolio was built up during the extended spell of asset purchases or “quantitative easing”. This was designed to stimulate an economy that had fallen into a trough in the aftermath of the financial crisis and was struggling to find a way out of it

The former chancellor, Kwasi Kwarteng’s “fiscal statement” required a response, with the Bank forced into the position of promising to buy more bonds to arrest a meltdown. Yesterday, the Bank had dismissed a report in the Financial Times that it was set to delay the sale of any of its bonds for a month.