Bank of England's QT Plans Take Center Stage Over Interest Rates

The Bank of England's Monetary Policy Committee (MPC) meeting on Thursday is expected to focus more on quantitative tightening (QT) plans than interest rate decisions. Although a hold at 3.75% is widely anticipated, bond investors are paying close attention to the annual review of QT.

The BoE's gilt holdings have already fallen to approximately £488-490 billion since the tightening program began in early 2022. The central bank plans to slow down its gilt runoff from £70 billion annually to around £50 billion for the October 2026 to September 2027 period.

This reduction is not due to policymakers becoming more dovish, but rather a mechanical change caused by the shrinking pipeline of maturing bonds. Active gilt sales are projected to remain at £20 billion per year.