BoE Slows Quantitative Tightening Pace, Reduces Gilt-Selling Target

The Bank of England has adjusted its quantitative tightening strategy, reducing its annual gilt-selling target to £70 billion. This change comes after the BoE's gilt holdings peaked at approximately £895 billion in February 2022 and had been trimmed to around £738 billion by early 2024.

Under the new framework, the expected stock of gilt purchases will range from £488 to £650 billion over the coming year. Governor Andrew Bailey framed the adjustment as a move toward better alignment with market expectations and economic stability.

The decision arrives amidst growing gilt issuance from the UK government and rising debt servicing costs. The BoE's previous quantitative tightening strategy had pushed gilt yields up by approximately 0.4%.