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MNI INTERVIEW: BOE Balance Sheet To Remain A Political Target

(MNI) London

The BOE’s gilt sales programme risks being too slow from a political perspective and too fast for markets, former top BOE official Bill Allen tells MNI.

The Bank of England will struggle to reduce its balance sheet quickly enough to reduce the danger of political interference in the next few years, but the pace of quantitative tightening will still pose difficult debt management issues in tricky markets, former top BOE official William Allen told MNI.

The BOE’s Monetary Policy Committee will vote next month on launching gilt sales of around GBP10 billion a quarter, reducing its GBP844 billion stock of gilts, when combined with redemptions, by some GBP80 billion every 12 months. While it has not specified an end point for the sales, at this pace its balance sheet would remain a potential political target for years, said Allen, who served in a variety of capacities at the Bank for three decades including deputy director until leaving in 2004. (See MNI INSIGHT: BOE's QT Pace Known, Terminal Point Unknowable)

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The Bank of England will struggle to reduce its balance sheet quickly enough to reduce the danger of political interference in the next few years, but the pace of quantitative tightening will still pose difficult debt management issues in tricky markets, former top BOE official William Allen told MNI.

The BOE’s Monetary Policy Committee will vote next month on launching gilt sales of around GBP10 billion a quarter, reducing its GBP844 billion stock of gilts, when combined with redemptions, by some GBP80 billion every 12 months. While it has not specified an end point for the sales, at this pace its balance sheet would remain a potential political target for years, said Allen, who served in a variety of capacities at the Bank for three decades including deputy director until leaving in 2004. (See MNI INSIGHT: BOE's QT Pace Known, Terminal Point Unknowable)

Keep reading...Show less