UBS On-Air: Paul Donovan Daily Audio 'Financial systems need to function'

The principle objective of any central bank must be to ensure the financial system functions. Policy will not transmit to the real economy if the financial system is paralysed. The Bank of England was confronted with a financial system that was increasingly paralysed in consequence of the UK government’s fiscal policy, and took action. The emergency bond purchases do not set a ceiling for UK government bond yields and are not inflationary - there has been a surge in liquidity demand, requiring an emergency increase in liquidity supply.