The Bank of England is testing one of the most challenging problems facing central banks today: Can they ease and tighten at the same time?
On Tuesday the BOE had to intervene again in the country’s dysfunctional government bond markets, offering to buy up to £5 billion, equivalent to $5.5 billion, a day of inflation-linked bonds, just 24 hours after expanding its offer to buy conventional bonds. Inflation-linked prices rose a little in morning trading, but failed even to reverse Monday’s huge selloff.
