BOE Poised to Halt Long-Dated Gilt Sales Amid Global Debt Market Rout

The Bank of England (BOE) is preparing to stop selling long-dated government bonds, specifically 20- and 30-year gilts, according to a report by The Telegraph.

This decision comes as part of the BOE's plan for quantitative tightening, which will be announced on Thursday alongside its latest interest rate decision. The move aims to free up some cash for Finance Minister John Healey, who is preparing for the government's first budget statement in October.

Pricing of 20- and 30-year gilts has fallen to their lowest since 1998 due to a global selloff in debt markets. The BOE has already scaled back sales of longer-dated gilts, with investors expecting just over 15% of the central bank's bond sales in the next 12 months to be of longer maturity.

The Telegraph reported that halting long-dated bond sales could save the government £2.5 billion a year by the end of the decade. The BOE accumulated £875 billion of government bond purchases between 2009 and 2021 as part of its emergency support for the economy, but since stopping reinvestment in maturing gilts in February 2022, its bond holdings have fallen by over £400 billion.