MNI BRIEF: BOE Ramsden's QE Unwind View Into​ Focus

The Bank of England's upcoming review of its QE unwind policy will likely be a key focus for Deputy Governor Dave Ramsden when he speaks and answers audience questions Wednesday as he addresses the topic of "QE as an economic policy tool". Ramsden can point to previous work from the BOE on the subject, although -- aware of the financial markets sensitivity on the subject -- he will keep any comments largely abstract and won't prejudge the work of Threadneedle Street staff.

The Bank's analysis was set out in a speech by Governor Andrew Bailey, presenting a paper at the August 2020 Jackson Hole central bank symposium, and it came close to acknowledging that the current approach, of only looking to unwind QE after Bank Rate hit a certain threshold, was flawed as it risked "ratcheting up of the stock of assets held over time" if Bank Rate remained at low levels until the next crisis struck, triggering additional QE.

That paper said there was "a greater motivation for tightening monetary policy by unwinding QE, rather than raising the policy rate," and it is unlikely Ramsden will flatly contradict that argument, although he may well be nuanced on the topic.