The Bank of England has been forced to apply “plasters on the financial wounds created by the Government” after announcing it was launching an emergency gilt-buying programme in efforts to calm financial markets, experts have said.

The temporary measure to buy Government bonds – known as gilts – to bring down spiralling borrowing costs has been met with a mixed reaction in the City.

The announcement spurred on an immediate fall in UK long-date gilt yields, effectively bringing down the interest rate on public borrowing after it soared earlier this week, analysts said.

But the Bank of England’s move also signals a “topsy-turvy” set of policies with a bond-buying spree counteracting efforts to tame inflation with aggressive interest rate hikes, according to investment platform Hargreaves Lansdown.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The move that Bank officials have made to step in now, just two days after it indicated it would wait until November, smacks of a bit of panic and also of frustration that the Government appears to be digging in its heels, reluctant to perform a political U-turn.

“Instead, the Bank of England has been forced to pursue a monetary U-turn, an abrupt change of policy as the Bank’s monetary policy committee had been pursuing a policy of selling down the Bank’s bond holdings.”

Experts pointed out that the move could reassure investors that the Bank is ready to intervene outside of its scheduled meetings.

Earlier this week, Bank Governor Andrew Bailey quashed speculation that the Monetary Policy Committee (MPC) would implement an emergency interest rate hike on Monday after the pound crashed to a record-low against the US dollar.

Joshua Raymond, a director at broker XTB.com, said: “This is a significant step by the Bank of England – it means it is now much more likely we will see major interest rate hikes before the next MPC meeting in November.

“Yet, on the other hand, the Bank of England is applying plasters on the financial wounds created by the Truss Government, who have shown no hint at reversing policy.

“So until that happens, the question remains how much further will the Bank be forced to intervene further and over what time period? Time will tell.”

It is also feared that the bond-buying programme could further hammer the pound, which sank to around 1.05 against the US dollar after the Bank announced its plans, before edging back up to 1.07.

Fawad Razaqzada, a market analyst at City Index and Forex.com, said: “While the UK bond market may calm down due to the actions of the Bank, let’s not forget that this is possibly not the best news the pound needed.

“The supply of pounds as a result of the Bank’s intervention will increase at a time when the Government has also announced a huge tax cutting bill. This will not help bring inflation down, but will have the opposite impact.

“Thus, the pound against the dollar could still be heading further lower.”

Meanwhile, Torsten Bell, the chief executive of the Resolution Foundation, said that the Bank has effectively decided to do temporary extra quantitative easing to stop wild increases in rates on long-term gilts.

He added that it was “nuts” that it had got the country “into this position in the first place”.