Sept. 29 – The US economy has been largely insulated from turmoil in UK markets, St. Louis Fed President James Bullard said on Thursday, a day after the Bank of England resumed bond purchases in an emergency measure to protect pension funds from a partial collapse.
“We’re certainly seeing some movement in US asset prices in response to this, but I think it’s about UK monetary policy,” Bullard said during a conference call with reporters.
“I don’t see this really affecting US inflation or real growth developments, so it’s mostly about financial markets having to factor in the volatility you see in the UK.”
The pound hit a record low of $1.0327 on Monday and British government bonds sold at a ferocious pace in response to tax cuts proposed by the government of new British Prime Minister Liz Truss, seen as fueling inflation further and putting the country’s fiscal and monetary policies in place. that. in conflict.
The mixed signals added another dose of volatility to global financial markets, which are already facing faster and higher-than-expected increases in Federal Reserve interest rates and many other countries racing to follow in their footsteps.
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