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Bailey Tweaks Reserves Estimates, Sees Drawdown Finishing 2H25

BOE
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  • BOE Governor Bailey gave an update on potential developments for bank reserves, seeing them likely settle at £345-490bn.
  • He expects a significant increase in repo operations whilst he also sees bank reserves potentially hitting a stable level in 2H25.
  • Full remarks here.
  • The outright level is similar to estimates from mid-Feb when he saw steady reserves towards the upper end of the £325-480bn range, speaking a few days after he said we expected “reserves to fall from where it is today (£467 billion), and to settle at a point which is likely to be determined more by the financial stability demand for reserves – the traditional Bagehot point. I will go a bit further and say that my best guess today is that the demand for reserves by the banks will settle at a level higher than we would even in the recent past have expected.”
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  • BOE Governor Bailey gave an update on potential developments for bank reserves, seeing them likely settle at £345-490bn.
  • He expects a significant increase in repo operations whilst he also sees bank reserves potentially hitting a stable level in 2H25.
  • Full remarks here.
  • The outright level is similar to estimates from mid-Feb when he saw steady reserves towards the upper end of the £325-480bn range, speaking a few days after he said we expected “reserves to fall from where it is today (£467 billion), and to settle at a point which is likely to be determined more by the financial stability demand for reserves – the traditional Bagehot point. I will go a bit further and say that my best guess today is that the demand for reserves by the banks will settle at a level higher than we would even in the recent past have expected.”