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Bank of England Governor Andrew Bailey told pension fund managers to finish rebalancing their positions by Friday when the British central bank is due to end its emergency support program for the county’s fragile bond market.
“We have announced that we will be out by the end of this week. We think the rebalancing must be done,” Bailey said at an event organized by the Institute of International Finance in Washington on Tuesday.
“And my message to the funds involved and all the firms involved managing those funds: You’ve got three days left now. You’ve got to get this done.”
Earlier on Tuesday, the Pensions and Lifetime Savings Association, an industry body, urged the BoE to extend the bond-buying program until Oct. 31 “and possibly beyond.”
But Bailey stressed that the program was part of the BoE’s financial stability operations, not a monetary policy tool, and had to be temporary.
The British central bank expanded its bond-buying on Tuesday to include inflation-linked debt, almost two weeks after launching it to help pension funds cope with a slump in bond prices triggered by the announcement of unfunded tax cuts by the new government of Prime Minister Liz Truss.
“Things seemed calmer again today,” Bailey said, referring to conditions in the gilt market. “We will see.”