Overview
- Bailey published an op-ed in The Times on Monday defending the quantitative tightening programme and saying it rebuilds the Bank’s ability to act in future crises.
- The Bank is reducing its gilt holdings by letting bonds mature and by active sales, and it has cut the annual tightening target from about £100 billion to roughly £70 billion.
- Under current arrangements the Treasury covers realised trading losses, and Bailey highlighted transfers of about £108 billion to the Bank since late 2022 versus roughly £124 billion returned in earlier years to argue QE and QT have been broadly neutral for the Exchequer.
- Reform UK leader Nigel Farage has pressed to halt QT and to stop interest on central-bank deposits to save what his party calls tens of billions, arguing taxpayers are bearing heavy costs.
- Active gilt sales can change market supply and push up government borrowing costs, so the Bank says shrinking its balance sheet now restores policy room while critics warn of near-term fiscal and market impacts.