Central bank announces surprise plan to sell billions of pounds in government bonds back to the Treasury

• Burnham’s talk of ‘breathing space’ at odds with reality of future rate rises

• The Bank is shaking up its bond sales – why does it matter?

The Bank of England has kept interest rates on hold as it warned a continuation of the bitter fighting in the Middle East could force it to raise borrowing costs amid mounting fears over inflation.

It also announced a surprise plan to sell billions of pounds in UK government bonds back to the Treasury to avoid fuelling turbulence in the gilt market, a decision that could have consequences for the public finances before next month’s budget.