Bank of England's Bailey tells pension funds they have 3 days to rebalance

WASHINGTON, Oct 11 (Reuters) - Bank of England Governor Andrew Bailey told pension fund managers to finish rebalancing their positions by Friday when the British central bank is due to end its emergency support programme for the county's fragile bond market.

"We have announced that we will be out by the end of this week. We think the rebalancing must be done," Bailey said at an event organised by the Institute of International Finance in Washington on Tuesday.

"And my message to the funds involved and all the firms involved managing those funds: You've got three days left now. You've got to get this done."

Governor of the Bank of England, Andrew Bailey, speaks during the Bank of England's financial stability report news conference, at the Bank of England, London August 4, 2022. Yui Mok/Pool via REUTERS/File Photo

Earlier on Tuesday, the Pensions and Lifetime Savings Association, an industry body, urged the BoE to extend the bond-buying programme until Oct. 31 "and possibly beyond."

But Bailey stressed that the programme was part of the BoE's financial stability operations, not a monetary policy tool, and had to be temporary.

The British central bank expanded its bond-buying on Tuesday to include inflation-linked debt, almost two weeks after launching it to help pension funds cope with a slump in bond prices triggered by the announcement of unfunded tax cuts by the new government of Prime Minister Liz Truss.

"Things seemed calmer again today," Bailey said, referring to conditions in the gilt market. "We will see."

Reporting by Pete Schroeder in Washington and David Milliken in London Writing by William Schomberg

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