Bank of England Governor Andrew Bailey urged governments to present clear plans for stabilizing public finances as bond markets face mounting pressure. Speaking at a conference in Istanbul hosted by Turkey’s central bank, Bailey stressed that fiscal policies must be credible and stability-focused to restore market confidence.
Bailey emphasized that realistic commitments to reducing debt could help ease investor demands for higher returns on government bonds during crises, such as the recent outbreak of the Iran war. He stated, "In other words, such commitments are needed more than ever when these negative shocks occur."
The governor also reiterated the importance of central banks maintaining their focus on curbing inflation. While he described recent financial market volatility as "some way from normal," he noted that the situation had not yet reached a point of stress or illiquidity.
British government bond yields surged to their highest levels in decades on Thursday, part of a global selloff fueled by another surge in borrowing costs and rising inflation.