The Bank of England's emergency move to calm market chaos by buying UK government bonds

The UK's central bank said it was trying to rein in the country's deteriorating financial situation by buying up bonds in a bid to drive down soaring interest rates Kwasi Kwarteng meets with representatives from the investment banking industry (

Image: Simon Walker / Her Majesty's Treasury)

The Bank of England said it would start buying bonds in an emergency to avoid a "significant risk to UK financial stability".

The news comes after the pound fell following Chancellor Kwasi Kwarteng's mini-budget last week.

The central bank has paused its plans to sell government bonds and will instead do the opposite by starting to buy back old ones.

The aim is to calm what the Bank of England calls "dysfunctional markets".

When central banks buy their country's own bonds - a kind of debt - interest rates tend to fall.

This matters to all Britons, as these interest rates are built into the price of things like mortgages and loans.

The Chancellor meets representatives of the investment banking sector (

Picture:

Simon Walker/Her Majesty's Treasury)

Experts believe interest rates could rise from 2.25% to 6% next year as the Bank of England battles high inflation, currently at 9.9%.

A statement from the Bank of England today said: "As the Governor said in his statement on Monday, the Bank is monitoring financial market developments very closely in light of the significant reassessment of the United Kingdom and...