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The pound swung sharply against the dollar after Zhuohuisi’s government announced its new policy on Friday.
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The Bank of England rushed into the market yesterday to buy £ 1 billion worth of government bonds and said it will buy all necessary government bonds in unlimited quantities until 14 October. GBP / USD rebounded sharply overnight once it regained its 1.09 level, almost recovering its losses from last Friday, and last time it fell back to 1.0789, down 0.8619%. The UK 10-year government bond yield fell to 4.0070% and the 20-year government bond yield fell to 4.134%.
Monetary tightening vs fiscal easing
Like the rest of the world ’s major economies, the UK faces stubbornly high inflation and the country’s central bank is aggressively raising interest rates to curb the rampant situation, but recession fears plague it too. amid aggressive monetary tightening. Therefore, Zhuohuisi’s new policy confronts the UK with the embarrassing situation of monetary tightening and fiscal easing at the same time.
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Commonwealth Bank of Australia strategist Carol Kong wrote in a note to clients that the Bank of England bond purchases could alleviate the UK government’s financial costs, but did not resolve the tension between fiscal easing and monetary tightening.
Zhuo Huisi is said to be under pressure from the party
When the country’s central bank is trying to maintain financial market stability, on the other hand, Zhuohuisi’s policy is rumored to have wreaked havoc in the financial market. Faced with pressure from the Conservative Party, Zhuohuisi could become the lowest. -Lived prime minister in British history.