UK bond yields climbed after the Bank of England (BoE) denied claims that it plans to further postpone its quantitative tightening program. The move comes after the Financial Times reported earlier today that the BoE intends to delay sales of government bonds due to market turmoil.

Sterling Down after BoE Disputes Reports of Delaying Government Bond Sales

The Bank of England (BoE), the Central Bank of the UK, denied the report by Financial Times (FT) that it plans to postpone its government bond sales due to market volatility, sending UK bond yields rising Tuesday. Yields on the 30-year and 10-year gilts jumped by 10 basis points and 11 basis points, respectively.

The FT reported Tuesday morning that the BoE is set to further delay its quantitative tightening program in an effort to stabilize the gilt markets following the UK’s “mini-budget” debacle. The BoE already delayed the £838 billion sale of the gilts it purchased during the quantitative easing (QE) program from Oct. 6 to the end of this month.

The FT said in the report the BoE is “expected to bow to investor pressure for a further pause until the market becomes calmer. The Financial Times has learned that the bank’s top officials have come to this view after judging the gilts market to be “very distressed” in recent weeks, a view backed by its Financial Policy Committee.”

The BoE disputed the FT’s report, describing it as “inaccurate” without providing any further details. The pound (GBP) rose to a 2-week high this morning on the FT’s report, before falling back to $1.1277 after the central bank denied it.

Why Did BoE Delay Gilt Sales in the First Place?

The BoE announced late last month it intends to purchase long-dated bonds and delay gilt sales after GBP fell to a record low against the USD, which has been skyrocketing in 2022. The pound hit a new bottom after the new UK prime minister Liz Truss announced the largest tax cuts in 50 years.

The tax cuts, aimed at boosting the UK’s economic growth, were heavily criticized by investors and the International Monetary Fund (IMF), who raised their concerns that the move could significantly worsen the cost-of-living crisis.

Former Chancellor Kwasi Kwarteng, who was expected to publish the growth plan next month, was relieved of his duty earlier this month upon Truss’s request. Kwarteng was replaced by Jeremy Hunt, former foreign and health minister.

Hunt dropped Truss’s economic growth plan Monday, marking a landmark policy U-turn in an effort to recover some of the lost investor confidence. Hunt explained in detail why he must reverse almost all policies that made Truss a leader of the Conservative Party and the UK’s new prime minister.

This article originally appeared on The Tokenist

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