THE BANK of England is to launch a temporary UK Government bond-buying programme to “restore orderly market conditions” after the value of the pound plummeted after the Chancellor’s mini-budget.

Chancellor Kwasi Kwarteng's growth strategy including cutting tax for the super-rich and the basic rate of tax as well as stamp duty in England.

The markets reacted badly to the move, made worse after the UK Government refused to allow the OBR from publishing independent forecasts alongside the mini-budget.

The value of the pound fell to a record-low against the US dollar, with the bond-buying scheme introduced on a temporary basis to try and curb saoring borrowing costs.

The Bank of England has warned that if the situation deteriorates further there "would be a material risk to UK financial stability".

Nicola Sturgeon has warned the UK is in the grip of a "rapidly deteriorating economic crisis", labelling the move by the Bank of England as "extraordinary".

The First Minister renewed her call for the the House of Commons to be "immediately recalled" and "as at least an initial symbol of sense", said the top tax rate abolition should be "dumped".

Appearing in front of the Holyrood conveners' committee, she pointed to the "very urgent and immediate action taken" by the Bank of England  to "try and reduce the damage of the UK Government's own policies".

The First Minister added that it was "quite hard to overstate the impact Friday's budget will have on poverty, inequality and the financial stress that millions of people are going to be living under".

In a statement, the bank said it is “monitoring developments in financial markets very closely” after the fall of the pound has repriced UK and global financial assets.

The bank stressed “this repricing has become more significant in the past day” and is impacting long-dated UK Government debt.

It added: “Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability.

“This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.

“In line with its financial stability objective, the Bank of England stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses.

“To achieve this, the Bank will carry out temporary purchases of long-dated UK government bonds from 28 September. The purpose of these purchases will be to restore orderly market conditions.”

The bank has insisted that “these purchases will be strictly time limited” and “are intended to tackle a specific problem in the long-dated government bond market”.

The Treasury said the UK Government will continue to “work closely” with the Bank of England.

A HM Treasury spokesperson said: “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.”