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MNI POLICY: BOE Seeks Low Key QT, No Sharp Pace Change Likely

MNI looks at the BOE's upcoming announcements on rates and its QT programme.

MNI (LONDON) - The Bank of England is likely to make low-key policy announcements next Thursday, announcing that it will slightly accelerate or hold roughly steady the pace of its reductions in bond holding over the next 12 months, and leaving its policy rate on hold.

With a surge in maturing gilts over the next 12 months to GBP87 billion, easing the overall pace of the bond runoff even modestly from the current GBP100 billion, to say GBP80 billion, would see a hard stop to sales, meaning the BOE would no longer be able to smooth active sales along the curve. Just keeping the annual pace steady would slow active sales to just GBP13 billion, but the odds appear tilted to a modest increase - with some analysts making a plausible case for up to GBP120 billion in total reductions.

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MNI (LONDON) - The Bank of England is likely to make low-key policy announcements next Thursday, announcing that it will slightly accelerate or hold roughly steady the pace of its reductions in bond holding over the next 12 months, and leaving its policy rate on hold.

With a surge in maturing gilts over the next 12 months to GBP87 billion, easing the overall pace of the bond runoff even modestly from the current GBP100 billion, to say GBP80 billion, would see a hard stop to sales, meaning the BOE would no longer be able to smooth active sales along the curve. Just keeping the annual pace steady would slow active sales to just GBP13 billion, but the odds appear tilted to a modest increase - with some analysts making a plausible case for up to GBP120 billion in total reductions.

Keep reading...Show less