David Miliken
London (Reuters) -Bank of England looks set this week to slow down the pace of £ 100 billion per year, reducing its government bonds after increased volatility on bond markets, maintaining its main interest rate.
Although the central bank considers the pace of quantitative turning on, which has only a small impact on the wider economy, they carefully follow the financial markets where some accuse it of pushing the costs of loan loans.
Boe is among the main central banks in performing direct sales of government bonds that are tuned to strengthen the economy in years after the global financial crisis in 2008 rather than just set them.
Sale 2022, Boe reduced its gilded shares from £ 875 billion ($ 1.2 trillion) to £ 558 billion and over the last two years, sows offers a pace of £ 100 billion a year.
Boe gave little about his thinking, and Governor Andrew Bailey told the legislators at the beginning of this month that the decision remained “open”.
However, Reuters’ survey showed that economists expect the monetary policy committee to slow down the pace to a high school this week – a more decrease than a decline in 72 billion pounds in its own English survey in August.
“If they leave it unrelated, the market will sell significantly an offer,” said Tomasz Wieladek, chief European economist of T. Rowe Price.
The British 30 -year government bonds – which have been opposite prices – have hit the highest since 1998 on September 3, while the new 10 -year debt has been sold since 2008, putting pressure on Finance Minister Rachel Reeves before its budget 26 November.
Last month, Boe estimated that its QT has only added 0.15-0.25 percentage points to the British government loans.
Wieladek said he thought Boe would reduce the QT pace to £ 80 billion, but ALD would stop the sale of longer data bonds that have seen the biggest price drop in the last year.
Love Boe is to remove excess cash, which is built in the British financial system for QE, but it is not clear what the neutral level is. The Boe Bank survey provided a range of £ 385-540 billion compared to the current level of approximately 650 billion.
Banks using a short -term Boe liquidity facility hit its highest in years last week, suggesting that a neutral level of reserves could be closer than it seems.
Boe would have to reduce the QT pace to £ 49 billion to stop active sales and achieve QT only gilts maturation.
(Tagstotranslate) Bank of England
