Given that the surge in gilt yields that has forced the Bank of England to intervene in the market was initially driven by the government’s loose fiscal policies, it makes sense that the Bank may not be able to fully wind-up its support schemes until the markets’ fiscal concerns have eased. And if the Chancellor’s Medium-Term Fiscal Plan on 31st October doesn’t do the trick, then the Bank may have to continue for some time with the odd process of raising interest rates to hit its monetary policy objective of the 2% inflation target while also keeping its balance sheet bigger than otherwise to maintain financial stability.
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