The bank stands ready to purchase conventional gilts with a residual maturity of more than 20 years in the secondary market, initially at a rate of up to £5bn per auction. 

These parameters will be kept under review in light of prevailing market conditions.

The first auction was conducted on 28th September, and subsequent auctions will be carried out on each weekday until 14th October between 2:15–2:45pm.

This comes after the chancellor’s mini-budget last week, which sparked market turmoil that led to numerous lenders temporarily withdrawing products from the market.

The chancellor’s latest economic plan was criticised by the IMF, which stated that it doesn’t recommend “large and untargeted fiscal packages” at this juncture, given the elevated inflation pressures.

“It is important that fiscal policy does not work at cross purposes to monetary policy. Furthermore, the nature of the UK measures will likely increase inequality,” it added.

•   Scores of lenders pull or reprice products
•   Property industry reacts to tax cuts in mini-budget
•   Inflation drops to 9.9% while average house price rises by 15.5% — industry reacts

Industry experts react to the current economic environment and the Bank of England’s gilt market operation

Wes Wilkes, CEO at IronMarket:

“We have a PM acting like a bull in a china shop, while the Bank of England follows behind her picking up the broken bits to try and salvage some credibility in our currency and economy. 

“We have a rate rise to come next week, too. Strap in and strap in tight."

Graham Cox, director at Self Employed Mortgage Hub: 

“Goodbye quantitive tightening, welcome back quantitive easing. If it wasn't so serious, it would be laughable how quickly the Bank of England has had to do a 180 degree turn — more kicking the can down the road. 

“The economic circumstances look increasingly dire with each passing day, and the credibility of Kwarteng and Truss has been shattered. 

“We need a general election now because this government is a sinking ship and will take millions down with it.”

Samuel Mather-Holgate of Mather & Murray Financial:

“This [the BoE gilt market operation] was a much needed intervention in the market, the only other alternative being to jack rates up by up to 2%, which would have crushed homeowners with mortgages. 

“It’s further evidence that the mini-budget was a disaster.”

Dominik Lipnicki, director at Your Mortgage Decisions: 

“This was the right course of action, but it does, however, show a level of desperation to stabilise the markets.

“The government will find it hard to U-turn but the pressure on them to do so is growing by the day.”