Last Updated on September 28, 2022 by Bitfinsider

When asked about the sharp drop in sterling and bond prices following his first fiscal statement, British finance minister Kwasi Kwarteng said on Sunday (Sep 25) that he was focused on boosting longer-term growth, not short-term market movements.

Kwarteng scrapped the country’s top income tax rate and canceled a planned increase in corporate taxes, all on top of a massively expensive plan to subsidize household and business energy bills.

On Friday, sterling fell more than 3% to its lowest level since 1985 against the US dollar, as well as against the euro and Japanese yen, while government bonds experienced their biggest daily sell-off in decades.

The British pound fell 4.85 percent to an all-time low of US$1.0327 on Monday, extending the drop from Friday.

Kwarteng defended the measures on Sunday, saying they were necessary to help the economy recover from the once-in-a-generation shocks of the COVID-19 pandemic and the rise in energy prices caused by Russia’s invasion of Ukraine.

Kwarteng stated that dealing with inflation was the responsibility of the Bank of England and its governor, Andrew Bailey.

On Thursday, the day before Kwarteng announced his package, the Bank of England raised interest rates by half a percentage point to 2.25 percent.

“They’re tasked with dealing with inflation… they don’t work in isolation, which is why I said I’d meet with the governor twice a week. And we exchange ideas, but he is, of course, completely independent “Kwarteng explained.

When asked if he was concerned about the level of inflation, Kwarteng responded, “I’m confident that the Bank is dealing with that, but what perplexed me was that you don’t deal with people’s rising cost of living by taking more of their money in tax.”