Bank of England Governor Andrew Bailey has urged governments to present credible fiscal plans to stabilize public finances amid growing pressure on bond markets. Speaking at a conference in Istanbul hosted by Turkey’s central bank, Bailey emphasized that fiscal policies must be stability-focused to restore market confidence. He warned that realistic commitments to reducing debt are crucial, especially during negative shocks such as the recent Iran war outbreak, as they help limit investor demands for higher returns on government bonds.
Bailey also stressed that central banks must remain committed to reducing inflation. He described recent sharp movements in financial markets as 'some way from normal' but noted they had not yet reached a point of stress or illiquidity. His remarks come as British government bond yields hit their highest levels in decades, part of a global selloff driven by surging inflation.