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The Bank of England took steps to calm troubled markets on Wednesday as leading financial institutions continue to blame the UK government for tax cuts they say could worsen inequality and stifle economic growth, a move that hurt bond markets immediately reassured, but did little to prevent the pound from slipping back towards the historic lows it hit last week.

Important facts

UK government bonds rallied on Wednesday after the Bank of England pledged to buy long-dated bonds and “restore orderly market conditions,” spurred into turmoil last week when Treasury chief Kwasi Kwarteng announced plans to borrow billions to get the most scrap income tax rate and support households with rising energy costs.

The move did little to stem the pound’s decline against the dollar, which fell below $1.055 after a brief rebound, slipping 1.7% on the day and nearing a record low of $1.035 to which it fell on Monday.

The intervention follows harsh criticism from the IMF, a 190-member international organization working to stabilize the global economy, which warned plans for large unfunded tax cuts and huge increases in public borrowing are fueling inflation and deepening inequality could.

The organization said it was “closely monitoring” developments in the UK and called on the government to “reassess” its policies, particularly those that “benefit high-income earners”.

The IMF, which rarely publicly criticizes a developed economy, is not alone in voicing concerns about Britain’s fiscal policies, and influential credit agency Moody’s has warned the policies are slowing the country’s economic growth and the country’s ability to recover Being able to pay off debt could “permanently weaken”.

Moody’s raised the prospect of a future UK credit rating downgrade and lowered its 2023 GDP growth forecast to 0.3% from 0.9%.