The Bank says it will buy government bonds to prevent a 'material risk to UK financial stability'.
The Bank said its bond purchases would be "time limited" and carried out on "whatever scale is necessary" to ease investor concerns.Paul Dales, chief UK economist at Capital Economics, said the Bank had been forced to step in to avoid the early stages of a financial crisis and warned fears over the economic outlook were growing.
"The purchases will be unwound in a smooth and orderly fashion once risks to market functioning are judged to have subsided," the Bank said in a statement. The government says it will not reverse its tax cuts, but has promised to release further plans to boost growth and reduce public debt in the weeks and months ahead.
It added that the chancellor was "committed" to the Bank's independence, adding: "The government will continue to work closely with the Bank in support of its financial stability and inflation objectives."
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