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MNI INTERVIEW: BOE Gilt Sales Should Be Slow, Steady - Forbes

(MNI) London

Former MPC member Kristin Forbes tells MNI that the BOE should start gilt sales slowly but continue throughout market ups and downs.

The Bank of England could signal that it will reduce its balance sheet as much as possible without undermining the financial system when it announces its new framework for selling off its holdings of gilts alongside the August Monetary Policy Report, former Monetary Policy Committee member Kristin Forbes told MNI.

Gilt sales should start slowly, said Forbes, though she added that are no set rules for balance sheet shrinkage, with central banks facing a trade-off between providing guidance and leaving themselves the flexibility to adapt to changing circumstances.

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The Bank of England could signal that it will reduce its balance sheet as much as possible without undermining the financial system when it announces its new framework for selling off its holdings of gilts alongside the August Monetary Policy Report, former Monetary Policy Committee member Kristin Forbes told MNI.

Gilt sales should start slowly, said Forbes, though she added that are no set rules for balance sheet shrinkage, with central banks facing a trade-off between providing guidance and leaving themselves the flexibility to adapt to changing circumstances.

Keep reading...Show less