Bank of England moved to restore stability after the IMF said unfunded tax cuts in the U.K. may fuel inflation and are likely to increase economic inequality
DANIEL LEAL—AFP/Getty ImagesLONDON — The Bank of England said Wednesday that it will launch a temporary government bond-buying program to stave off “material risk to UK financial stability” after unfunded government tax cuts spooked markets and sent the British pound tumbling.
The value of the pound sagged Wednesday morning after the rare IMF warning to a Group of Seven economy, trading at under $1.07. Treasury chief Kwasi Kwarteng also was meeting Wednesday with executives from investment banks as the new Conservative government seeks to soothe markets. The British currency is still down 4% since Friday, and the pound has fallen 20% against the dollar in the past year.
“The Nov. 23 budget will present an early opportunity for the U.K. government to consider ways to provide support that is more targeted and reevaluate the tax measures, especially those that benefit high income earners,” the IMF said.
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