As the value of the pound plummeted due to the British government's massive tax cuts, the aftermath is growing.

The central bank of the UK has finally started to evolve with a massive purchase of government bonds. 

By Bae Jun-woo.


After the British government announced a massive tax cut, the pound plunged to an all-time low of $1.03.

The Bank of England eventually intervened in the market.

It announced an emergency plan to buy £5 billion of government bonds every day for the next 13 days.

British economists say it's a daunting move.

This is because buying government bonds to release money while raising interest rates at the same time increases the likelihood of an increase in national debt and a prolonged economic recession.

Even the International Monetary Fund (IMF) and the International Monetary Fund (IMF) issued a statement, unusually critical of British policy.

[Suzanna Streeter/Market and Investment Analyst: If the government doesn't do more to break away from its promise of massive tax cuts, it could cause panic and frustration in markets.]

The aftermath of the UK tax cuts is also spreading to the US.

The 10-year US Treasury yield has soared to the 4% range, but it is the first time in 14 years that the US Treasury yield has exceeded 4%.

As the US Federal Reserve tightens policies to keep inflation in check, a vicious cycle of weakening investor sentiment continues.

[Jerome Powell/Chairman of the US Federal Reserve (Last 21): The Fed will cut inflation (currently 8.3%) to 2%.

We will continue (tightening the currency) until that task is achieved.]

The sharp rise in the US exchange rate raises concerns that each country's prices will rise sequentially and interest rates will rise, causing a debt crisis to materialize.