Bank of England Set to Slow Bond Sales as Quantitative Tightening Enters Next Phase

The Bank of England is expected to slow down its bond sales as quantitative tightening enters its next phase, according to a recent survey. The central bank has been reducing its massive bond holdings since 2022 through quantitative easing reversal. Investors expect the Bank of England to reduce its bond portfolio by £50 billion in the 12 months ending September 2027, which is lower than the current target of £70 billion.

The Bank of England built up a huge stockpile of government bonds between 2009 and 2021 through its quantitative easing programme. The central bank bought government bonds to inject money into the economy during periods of weak economic activity. Those purchases eventually reached £875 billion.

Investors expect around 43.3% of sales to come from bonds with maturities of three to seven years, while another 41.1% is expected to come from bonds maturing in seven to 20 years. The remaining 15.6% is likely to involve longer dated government bonds.