BoE Investors Expect £50 Billion QT in Year to September 2027

The Bank of England (BoE) has released its latest Market Participants Survey, revealing that investors expect the central bank to slow the pace of quantitative tightening (QT) in the year leading up to September 2027. According to the survey, market participants anticipate a £50 billion reduction in the BoE's bond portfolio over this period, down from the current target of £70 billion.

The BoE has been gradually unwinding its massive stockpile of government bonds since 2022 as part of its quantitative tightening program. It began buying £875 billion of British government bonds between 2009 and 2021 to support the economy through quantitative easing, but started selling them off in 2022.

The BoE's survey also provided insight into the expected breakdown of sales over the next period, with investors predicting that 43.3% will be made up of gilts with a 3-7 year maturity, 41.1% will be of 7-20 years maturity, and 15.6% will be of longer maturity.

The BoE has estimated that QT has contributed around 20-30 basis points to the 200 basis point rise in term premia on British government bonds since 2022, which is about 5 bps more than it previously estimated.