From “Flying Blind” to “Don’t Exaggerate” — Bailey’s Changing Tune on Gilt Turmoil.
Yesterday, Governor of the Bank of England Andrew Bailey offered his verdict on the latest gilt yield turmoil, and his advice was simply to ignore it.
Speaking to the Treasury Select Committee after 30-year gilt yields hit 5.7%, the highest level in 27 years following Keir Starmer’s embrace of high-tax advisers Torsten Bell and Minouche Shafik, Bailey downplayed concerns.
He told MPs:
“It’s important not to focus too much on the 30-year-bond rate. It’s a number that gets quoted a lot. It is quite a high number but it is not what is being used for funding at all at the moment actually. There is a lot of dramatic commentary on this but I wouldn’t exaggerate the 30-year bond rate.”
This apparent attempt at reassurance has raised eyebrows in Westminster and beyond. Many are asking why Bailey did not strike the same tone when Liz Truss was Prime Minister.
Bailey on Truss: Far Less Forgiving
When Truss was in office, Bailey was far sharper in his interventions. He publicly criticised her decision to exclude the Office for Budget Responsibility from her mini-Budget, warning that Britain was “flying blind” on fiscal policy. He also argued that her tax cuts damaged the UK’s reputation with international investors. While Bailey has since denied playing any part in her downfall, his comments at the time, coupled with the Bank’s silence as commentators declared she had “crashed the economy”, stand in stark contrast to his relaxed approach this week.
Protecting Labour?
Critics say this amounts to a glaring double standard. Under Labour’s stewardship, gilt yields have climbed higher than during Truss’s short premiership. Mortgage rates are higher, growth has slowed, and investment is draining away. Yet Bailey’s message today is: “don’t exaggerate.”
Truss’s so-called catastrophe was in fact fuelled by two structural pressures: quantitative tightening and the LDI pension time bomb, both of which fell squarely within the Bank of England’s remit. Instead of accepting responsibility, officials at Threadneedle Street let the blame fall on Truss alone. Now, as worse pressures build under Labour, the Governor insists markets should not “focus too much” on the very measure used to undermine her.
Questions of Impartiality
The Bank of England prides itself on independence. But Bailey’s shifting tone will fuel accusations of bias. Why was he quick to criticise Truss, but now shrugs off even higher gilt yields under Starmer?
As borrowing costs rise and economic pressures mount, the question remains: has the Governor chosen sides?
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