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Jeremy Hunt will deliver a statement later Monday on how the United Kingdom intends to put public finances on a sustainable path, the UK Treasury said. He hadn’t been expected to make an announcement until the end of the month.
The move helped avert a panicked sell-off in markets early Monday. UK government bond prices rose and the pound climbed 0.8% to $1.126.
While Hunt’s policy announcement could deliver a short term “relief rally,” significant volatility is likely to persist, said Francesco Pesole, a strategist at ING.
The Treasury said that Hunt met with the governor of the Bank of England and the head of the Debt Management Office on Sunday night to brief them on his plans. The finance minister’s full medium-term budget will still be delivered on October 31, together with a review by the UK’s fiscal watchdog, the Office for Budget Responsibility.
Truss faces serious questions about whether she can hold on to her job after financial markets rejected her controversial economic package, which aimed to boost growth by slashing taxes and ramping up borrowing.
Over the weekend, US President Joe Biden said he thought Truss’ trickle-down economic plan “was a mistake.”
“I disagree with the policy,” he said, adding that it was “up to Great Britain to make that judgment.”
Investors are also keeping a close eye on the bond market Monday after the Bank of England on Friday ended its £65 billion emergency purchase program, which was intended to temporarily help pension funds hit hard by the market tumult.
While the central bank ultimately bought under £20 billion in government debt, the intervention — announced on September 28 — help provide some reassurance as the bond market churned.
The Bank of England said Monday that the operations “enabled a significant increase in the resilience of the sector.”
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