British pound falls amid confusion over end date for bond-buying plan

Oct. 12 (UPI) -- Confusing messages in a matter of hours left investors guessing if the Bank of England will continue buying bonds to stabilize their prices easing challenges faced by many pension funds.

Late Tuesday, the bank's governor Andrew Bailey told pension funds during an event by the Institute of International Finance in Washington, D.C., that the institution was sticking with its Friday deadline to end bond buying.

"You've got three days left now and you've got to sort it out," he told pension leaders, according to BBC News.

Bailey's comments sent the value of the pound against the U.S. dollar tumbling to under $1.09.

The Bank of England said Tuesday it was expanding its purchase of government bonds, known as gilts, through Friday, after announcing a day earlier it was increasing its limit for gilt purchases.

It said the renewed effort would serve "as a further backstop" to restore orderly market conditions "by temporarily absorbing selling of index-linked gilts in excess of market intermediation capacity,

The Financial Times reported Wednesday morning, though, that the Bank of England is now signaling privately to bankers that it could actually extend its emergency bond-buying program past Friday, despite Bailey's comments assuring it would cease at the end of the week.

"[The Bank of England] told us that they were watching the [liability-driven investment] managers closely to see whether they had managed to generate enough liquidity for their clients to cope with margin calls and would decide whether to extend the facility on Thursday or Friday," a banker told the Financial Times.

The Pensions and Lifetime Savings Association, the British group representing the pension industry, warned the central bank of ending the bond-buying program too soon and suggested that it should last through the end of October.

British Chancellor Kwasi Kwarteng is expected to unveil his economic plan on balancing government finances, accompanied by an independent report on it. Kwarteng and Prime Minister Liz Truss said they stand behind a tax cut plan that has been criticized by some international banking groups in the face of mounting global inflation woes.

Bailey's comments appear to put pressure on the British government to come up with a plan quickly to deal with inflation. Some have complained that the tax cuts run counter to the Bank of England's efforts to bring inflation under control.