The Bank of England (BoE) will double the amount of government bonds it can buy each day before the buyback program ends on Friday, the central bank said on Monday.
Between Monday and Friday, banks will offer to buy up to £10bn ($11bn) of gold coins per day, up from a previous limit of £5bn ($5.5bn) per day.
The Bank of England said the measures were aimed at supporting an “orderly end” of its emergency bond-buying programme.
The program was introduced on September 28 after bond prices plunged following the announcement of the government’s mini-budget. This threatened to collapse pension funds and drive bond prices even higher.
In order to stabilize gold and silver, the bank said at the time it would purchase government bonds “at the required scale” until October 14.
By Monday, the BoE had conducted eight daily auctions, offering £40bn ($44bn) of bond purchases and buying around £5bn.
Investors worried about how the BoE would eventually sell off these recent buybacks, so the immature market fell after the announcement and yields rose across all maturities.
“The market wants to intervene as little as possible because ultimately there is less to unwind,” said Simeon Willis, chief investment officer of consultancy XPS Pensions Group. rice field.
The BoE also announced two additional measures to help banks release the liquidity pressures facing their liability-driven investment (LDI) funds.
LDI is a popular strategy used by pension funds to mitigate the risk of insufficient funds to pay pensioners, but it has been found that sudden market fluctuations can freeze pension funds.
The BoE said it will launch a temporary extended collateral repo facility that will run beyond 14 October.
The liquidity insurance business will accept a “broader range of collateral than is normally eligible,” such as corporate bond collateral, the bank said.
It also said it stands ready to help ease further the liquidity pressures facing LDI funds through regular indexed long-term repo operations every Tuesday.
The announcement, which was made before the market opened, was soon followed by a move by Prime Minister Kwasi Kwarten to bring forward the release of the medium-term financial plan and independent economic forecasts to October 31.
Susanna Streeter, senior investment and market analyst at Hargreaves Lansdowne, said it was a “two-pronged attempt to calm the market.”
“Policy makers and politicians are clearly nervous about the recurrence of the minor financial crisis that was unleashed following the Truss administration’s announcement of cutbacks and spending plans, and renewed efforts to repair the damage are likely. It is done
She said, “Much still remains to be said about the government’s plans, just as Kwasi Kwarten prepares to head to the International Monetary Fund’s annual meeting where his policy is set for renewed scrutiny. There is skepticism,” he said.
Reuters and PA Media contributed to this report.