LONDON, May 13 (Reuters) – The growing role of
price-sensitive international investors in buying British
government debt in place of domestic pension funds risks leading
to greater volatility in borrowing costs, Bank of England
policymaker Catherine Mann said on Wednesday.
On Tuesday, amid intense pressure on Prime Minister Keir
Starmer, British 30-year bond yields hit their
highest since 1998 and 10-year borrowing costs rose
to their highest since 2008.
“Although price-elastic investors can be an advantage in
terms of the level of interest rates, they are also more
responsive to changes in interest rates on account of domestic
or global shocks,” Mann said in the text of a speech to be given
at the London School of Economics.
“Hypothetically, if a new shock were to occur and weigh on
investor confidence, these more price-elastic international
investors could respond by reducing their gilt holdings. The
resulting volatility in yields could be reflected in a
persistent risk premium on gilts,” she added.
(Reporting by David Milliken, editing by Andy Bruce)
Corporate News Forex Market News Economic News Finance and Instruments Media & Entertainment Banking Technology