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2026-09-17 19:22:12
[Bank of England Significantly Adjusts Balance Sheet Reduction Plan, Cancels Long-Term Government Bond Sales] ⑴ The Bank of England has made significant changes to its quantitative tightening framework, canceling the long-term government bond sales arrangement and planning to complete the orderly reduction of its holdings of £476 billion by September 2034. ⑵ The plan proposes to retain £114 billion of UK government bonds maturing in 2049 and beyond to match subsequent paper currency issuance needs; £215 billion of bonds maturing before 2035 will be held to maturity and naturally liquidated; the remaining £147 billion of bonds maturing between 2035 and 2049 will be transferred to the government through the Debt Management Office at a rate of £19 billion per year. ⑶ Bank of England Governor Bailey wrote to the Chancellor of the Exchequer stating that this new arrangement will ensure the independence of monetary policy, balance cost control and risk prevention during the balance sheet reduction cycle, and improve the efficiency of fund utilization. ⑷ During the consultation phase with the Debt Management Office on the details, all originally planned quantitative tightening auctions have been suspended until April next year. (5) This extension will prevent the central bank from selling bonds and competing with government bond issuance, thus helping to ease short-term upward pressure on government bond yields.
