Archive · 26 Jun 2025
BoE Eyes Bond Market Sensitivity, QT Scrutiny
The Bank of England, like other central banks, is looking closely at how its actions affect the prices of long-term bonds.
They're worried about whether there's enough demand for these bonds.
The BoE is reviewing a process called 'quantitative tightening' where it reduces the amount of bonds it holds.
Even though the BoE has lowered interest rates, the cost of borrowing for long periods has not gone down.
Some experts think the BoE's actions may be making it harder to borrow money, even though the central bank is trying to make it easier.
Bank of England (BoE) officials are scrutinizing the effects of their balance sheet activity on long-term government debt.
BoE Governor Andrew Bailey mentioned the upcoming review of 'quantitative tightening' (QT) due to the steep UK yield curve.
Long-dated British gilt yields are higher this year, despite BoE rate cuts.
The BoE's QT plan involves both active sales of gilts and allowing bonds to mature.
Some analysts believe QT may be tightening lending conditions, thus diluting the effects of rate cuts.
- Who
- Bank of England officials, including Andrew Bailey and Dave Ramsden, are involved.
- What
- The Bank of England is scrutinizing its balance sheet activity regarding long-term government debt.
- When
- During a parliamentary testimony this week and throughout the year.
- Where
- London, Bank of England.
- Why
- To assess the effects of quantitative tightening and long-term debt on the economy.
Those Concerned About QT
The Bank of England
Impact of QT on Lending Conditions
Those Concerned About QT
Some experts and policymakers believe QT may be tightening lending conditions.
The Bank of England
The BoE maintains its QT process has a relatively modest impact on the market.
- BoE Governor
- Andrew Bailey
- BoE Deputy
- Dave Ramsden
- UK 30-year gilt yields
- 15 basis points higher on the year
- BoE QT Plan
- Active sales of gilts and allowing bonds to mature
- Yield curve gap
- Steepest in almost eight years