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MNI INSIGHT: BOE's QT Pace Known, Terminal Point Unknowable

(MNI) London

The Bank of England will start counting its GBP50-1O0bn balance sheet runoff once active sales start, with the end point of QT unknowable.

The Bank of England is unlikely to provide a precise numerical estimate of the end point for quantitative tightening when it publishes its framework for running down its gilts holdings in August, but it will set a pace for combined sales and redemptions, with the counting set to start from the time active sales begin.

It will also need to provide detail on how it plans to ensure liquidity and avoid a snap back in market rates by maintaining reserve supply if needed as gilt sales proceed.

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The Bank of England is unlikely to provide a precise numerical estimate of the end point for quantitative tightening when it publishes its framework for running down its gilts holdings in August, but it will set a pace for combined sales and redemptions, with the counting set to start from the time active sales begin.

It will also need to provide detail on how it plans to ensure liquidity and avoid a snap back in market rates by maintaining reserve supply if needed as gilt sales proceed.

Keep reading...Show less