BoE Relaxes QT Framework, Long-End Yields Fall

The Bank of England has announced significant changes to its quantitative tightening (QT) framework, providing relief to long-end investors.

The BoE will no longer actively sell bonds maturing after 2049 and will pause sales until April 2027. This means that around £120bn gilts with the longest maturities will remain on the central bank's balance sheet.

The decision to transfer gilts from the Bank of England to the UK government treasury could also impact the maturity profile, potentially replacing longer-dated gilts with shorter gilt issuance. This has contributed to a 12bp drop in 30Y gilt yields.