Yahoo TV

STORY: The Bank of England has stepped in with a bid to calm markets.

On Wednesday (September 28) policymakers said they would buy long-dated government debt on “whatever scale necessary”.

The move comes after UK bond prices tumbled in feverish trade.

Markets have been spooked by the government’s plans to slash taxes and ramp up borrowing.

That has seen sterling tumble along with UK debt.

By early Wednesday the yield on the country’s long-term bonds was above 5% - drastically raising the cost of all that new borrowing.

After the BoE intervention, markets turned around, with yields tumbling back below the 5% mark.

The move comes after international criticism put sterling under fresh pressure.

The International Monetary Fund warned that “large and untargeted fiscal packages” would be likely to heighten inequality.

It said inflation pressures meant they were unwise, and warned that fiscal policy shouldn’t work against monetary policy.

Analysts called the rare intervention by the global lender “scathing”, and a “rebuke”.

Ratings agency Moody’s piled in later.

It said the unfunded tax cuts were “credit negative” for the country.

The comments sent sterling tumbling again, and the Bank of England’s intervention did little to help.

By lunchtime in London, the pound was down around 1.5% versus the greenback, nearing Monday's (September 26) record lows, though it then clawed back some ground.

Some analysts have predicted sterling could soon go below parity for the first time.