Bank of England Governor Andrew Bailey urged governments to present clear, credible plans to stabilize public finances as bond markets face pressure from high borrowing levels and inflation. Speaking at a conference in Istanbul hosted by Turkey’s central bank, Bailey stressed that fiscal policy must be stability-focused to restore investor confidence.
Bailey emphasized that realistic commitments to reducing debt would help lower investor demands for higher returns on government bonds, especially during global shocks like the Iran war. He stated, 'In other words, such commitments are needed more than ever when these negative shocks occur.'
The governor also underlined the importance of central banks maintaining their focus on controlling inflation. He described recent financial market movements as 'some way from normal' but noted they had not yet reached a state of stress or illiquidity.
British government bond yields hit their highest levels in decades on Thursday, part of a global selloff triggered by a surge in oil prices.