UK finance ministry statement on BoE move to start unlimited bond purchases

FILE PHOTO: New British Chancellor of the Exchequer Kwasi Kwarteng walks outside Number 10 Downing Street in London

LONDON (Reuters) - Britain's finance ministry said on Wednesday Bank of England intervention in the government bond market was needed to tackle "significant volatility" and market dysfunction, and any losses would be fully indemnified by the government.

Below is a full text of the statement, from a spokesperson for the finance ministry:

"The Bank of England, in line with its financial stability objective, carefully monitors financial markets and any potential risk to the flow of credit to the real economy, and subsequent effects on UK households and businesses.

"Global financial markets have seen significant volatility in recent days. The Bank has identified a risk from recent dysfunction in gilt markets, so the Bank will temporarily carry out purchases of long-dated UK government bonds from today (28 September) in order to restore orderly market conditions. These purchases will be strictly time limited, and completed in the next two weeks. To enable the Bank to conduct this financial stability intervention, this operation has been fully indemnified by HM Treasury.

"The Chancellor is committed to the Bank of England’s independence. The Government will continue to work closely with the Bank in support of its financial stability and inflation objectives."

(Reporting by Sachin Ravikumar; editing by William James)