MNI BRIEF: UK Treasury, BOE Must Do QT Value-For-Money - TSC

Lawmakers have called on the Bank of England to work with the Treasury in order to factor in the scale of losses from quantitative tightening into its decision making on the pace and scales of asset sales.

A Treasury Select Committee report published Wednesday says the BOE and Treasury need to look at how the hit from QT to the public purse could be limited, as Threadneedle St's current QT programme does not factor in the losses to taxpayers through the Treasury idemnity of its asset purchase and sales programme, with the pace of gilt sales largely determined by the Bank's assessment of what the market can absorb without distorting pricing and at which maturities with regard to monetary policy.

That puts pressure on the BOE to rethink, and at least justify, and its QT strategy. In response, the BOE said it would consider the report. MPC member Swati Dhingra could address QT issues when appearing at an MNI event on Feb 21 (INVITE: Livestreamed MNI Connect VC with BoE Dhingra On Feb 21)