Britain is slowly winning back credibility in the gilt markets, a senior Bank of England rate-setter has said.
Sir Dave Ramsden, a deputy governor of the bank, told MPs on the Treasury select committee: “There is an old adage that credibility is hard won and easily lost.”
He added: “What we have seen when you look at yields in the gilts market is that credibility is being recovered… but that has to be followed-through.”
He said a return to stability in policymaking and the framing of fiscal events would be important to maintain credibility.
Yield on 10-year gilts fell to 3.8% yesterday after the news that Rishi Sunak, the fiscally conservative former chancellor, would become prime minister. Yield on 30-year gilts dropped to 3.7%.
The yield on the benchmark 10-year gilt had risen from 3.5% the day before the mini-Budget to a high of 4.5% on 27 September, while the 30-year bond rose above 5%, up from 3.7% in the same period.
