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MNI INSIGHT: BOE Gilt Sales Not Assured When Rates Hit 1%

(MNI) London

The Bank of England's Monetary Policy Committee will consider gilt sales when Bank Rate hits 1% but there is a case for caution.

While the Bank of England will consider triggering active gilt sales if, as widely expected, it hikes Bank Rate to 1% in May, policymakers have stressed that such a move is not a foregone conclusion, particularly at a time when yields are rising.

Some observers, like former senior BOE economist Stephen Millard, now deputy director at the National Institute, argue that, barring market stress, there will be little reason to delay gilt sales once Bank Rate hits the threshold at which current BOE guidance says that such a move will be considered. The Bank must return its GBP1 trillion balance sheet to desired levels, Millard told MNI in an interview. (See MNI INTERVIEW: Strong Case For BOE Gilt Sales At 1%-NIESR)

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While the Bank of England will consider triggering active gilt sales if, as widely expected, it hikes Bank Rate to 1% in May, policymakers have stressed that such a move is not a foregone conclusion, particularly at a time when yields are rising.

Some observers, like former senior BOE economist Stephen Millard, now deputy director at the National Institute, argue that, barring market stress, there will be little reason to delay gilt sales once Bank Rate hits the threshold at which current BOE guidance says that such a move will be considered. The Bank must return its GBP1 trillion balance sheet to desired levels, Millard told MNI in an interview. (See MNI INTERVIEW: Strong Case For BOE Gilt Sales At 1%-NIESR)

Keep reading...Show less