Economists are now more alert to the distributional effects of crises.” He said: “The whole Covid experience has strained social cohesion and people are going through very tough times. Mr Obstfeld said the retreat on the top rate of tax was a valuable “stabiliser”, not because the sums are relevant – just £2bm out of the £45bn package – but rather because it signals an awareness of rising political risk. The message was that ideology trumps all else,” he said. “It was reckless to roll out tax cuts without the requisite analysis or respect for institutions. His call for an immediate rate rise is a sign of Britain’s tarnished credibility. The warning from Mr Obstfeld is unexpected since he is generally viewed as a dove in global circles and has been warning recently against monetary overkill by central banks. But international investors may not see it that way.” “I think this is really intended to ensure an orderly transition during a busy week for data, just in case pension funds run into trouble at the end of this week and need to liquidate positions. It is also a surprise since the Bank has spent just £5bn of the £65bn facility so far.ĭavid Owen from Saltmarsh Economics said: “Some people in the market may be asking whether the Bank of England knows something we don’t. The rise in 30-year yields is disturbing because Sir Jon Cunliffe, the Bank of England’s deputy-governor, cited the initial fall in these yields as the seal of market approval for the emergency intervention. International investors are likely to see any extension of the gilt programme beyond that date as a step across the Rubicon, a switch from a liquidity operation to something more like a fiscal bail-out of the Government. Half of the yield-compression since the Bank wheeled out its bazooka two weeks ago has evaporated. Yields on 30-year gilts jumped a further 18 basis points to 4.56pc after the announcement. This does not seem to have settled the markets. It also relaxed the collateral requirements for banks to ease the strain of margin calls in the pension industry. The Bank of England raised the limit on gilt purchases to £10bn a day on Monday, doubling the fire-power to help back-stop the debt markets.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |