Bank of England news: Bank of England includes inflation-linked government bonds in its bond purchase list© Reuters. The Bank of England included inflation-linked government bonds into its bond purchase list The Bank of England expanded its emergency bond-buying program to include inflation-linked government debt securities, the central bank said in a statement.

Bank of England buying inflation-linked bonds in the amount of up to 5 billion pounds per day. On the eve of the Bank of England announced the launch of the Temporary Expanded Collateral Repo Facility (TECRF) to solve the liquidity problems of the so-called LDI-funds (liability-driven investment), used to hedge risks by pension funds.

Pension funds are major players on the market for government bonds, including inflation securities. Some 72% of U.K. private pension funds’ assets at the end of March 2021 were in bonds, including 47% in inflation-linked government bonds, according to official data.

The British Central Bank announced the start of a temporary government bond-buying program on September 28 after a spike in volatility following the presentation of the U.K. government’s plan for massive tax cuts. The program is expected to end on Friday, October 14.

“Earlier this week we saw a serious revaluation of British government debt again, particularly in inflation bonds. The functional disruption in this market and the prospect of a self-reinforcing ‘term sell-off’ dynamic poses a significant risk to UK financial stability,” the Central Bank said in a statement.

The yield on inflation-linked 10-year UK government bonds jumped 64 basis points the previous day, a record pace since 1992, according to Bloomberg.

Earlier we reported that European stock markets ended in a decline for the second consecutive session.