All that you need to know about Liz Truss' resignation as British Prime Minister

Liz Truss resigned today as Britain's Prime Minister, bringing to an end intense speculations about her future amid economic chaos brought about by her policies. Truss was undone by her economic programme that sent shockwaves through the markets and divided her Conservative Party just six weeks after she was appointed.

She quit just six weeks after she took charge and is now the shortest-ruling prime minister of the country.

Following are latest events, comments and context as compiled by Reuters:


POLITICS

* Truss said the Conservative party she heads would hold a leadership election to be completed within a week.

* Truss's resignation came after she lost her interior minister, Suella Braverman, less than a week after she fired her finance minister. Braverman cited "serious concerns" about the government.

MARKETS

* Sterling rallied after Truss resigned. The turned negative. Britain's mid caps jumped as much as 1%.

* Investors reined in bets of a full percentage-point interest rate increase by the Bank of England next month, after a top official said it remained to be seen whether rates rise as sharply as the market has been expecting.

* The biggest jump in food prices since 1980 pushed British inflation to 10.1 percent last month, matching a 40-year high hit in July in a new blow for households grappling with a cost-of-living crisis.

WHAT'S BEHIND THE CRISIS?

* The Bank of England was forced into emergency bond-buying to stem a sharp sell-off in Britain's 2.1 trillion pound ($2.3 trillion) government bond market that threatened to wreak havoc in the pension industry and increase recession risks.

* The sell-off began after then-new finance minister Kwasi Kwarteng's tax-cut announcement on Sept. 23.

* After firing Kwarteng, a close friend and ally, on Friday, Truss announced that corporation tax would rise to 25% as intended by her predecessor Boris Johnson, reversing her earlier plan to freeze it at 19%. Kwarteng's cut to the highest rate of income tax had already been reversed.

* His replacement Hunt on Monday then scrapped "nearly all" of Truss and Kwarteng's economic plan and scaled back her vast energy support scheme, announced in September, in a historic U-turn to try restore investor confidence.

* The BoE interventions have highlighted a growing segment of Britain's pensions sector - liability-driven investment.

* LDI helps pension funds use derivatives to "match" assets and liabilities to avert risks of shortfalls in payouts, but the soaring interest rates have triggered emergency collateral calls for those funds to cover the derivatives.