Bank of England Halts Gilt Sales Amid Global Bond Selloff
The Bank of England has suspended sales of British government bonds for six months and halted long-dated gilt sales as part of its revamped quantitative tightening policy. The move comes after British 30-year borrowing costs reached their peak since 1998 amid a worldwide bond selloff.
Governor Andrew Bailey stated that the Bank had chosen to hold back a significant portion of the gilts stock maintained for monetary policy objectives from being sold, with the rest to be phased out over eight years. Bailey emphasized his aim to shrink the Bank's gilt portfolio to a minimum.
Prices for longer-dated British government bonds surged after the announcement, with 30-year yields set for their largest single-day increase since April, driving yields to a three-week trough. Matthew Amis, investment director for rates management at Aberdeen Investment, noted that these adjustments were favorable for gilts, especially at the long end of the maturity spectrum.
The Bank acquired £895 billion in sterling debt via multiple rounds of quantitative easing from 2009 to 2021. It ceased reinvesting returns from maturing bonds in February 2022 and began offloading gilts to raise the overall speed of quantitative tightening to £100 billion annually by September 2022.