UK Treasury Chairman, Andrew Tyrie, has warned the Bank of England that a decline in the liquidity of the bond market would pose a threat to financial stability. Tyrie fears there will be a "vicious circle of declining liquidity and financial stress" when bond yields rise and prices fall in a response that is highly likely to growth in the economy. In the UK, ten-year gilt yields have rise from 1.81 per cent to 2.05 per cent. The Bank's Monetary Policy Committee (MPC) voted unanimously on Tuesday night for an increase in interest rates by 0.25% at its next meeting later this month.
UK Treasury Chairman, Andrew Tyrie, has warned the Bank of England that a decline in the liquidity of the bond market would pose a threat to financial stability. Tyrie fears there will be a "vicious circle of declining liquidity and financial stress" when bond yields rise and prices fall in a response that is highly likely to growth in the economy. The Bank's Monetary Policy Committee (MPC) voted unanimously on Tuesday night for an increase in interest rates by 0.25% at its next meeting later this month.