BoE Slows Gilt Sales Amid Market Turmoil

The Bank of England has announced a significant shift in its quantitative tightening policy, pausing sales of British government bonds for six months and halting long-dated gilt sales entirely. This move comes as a response to market turmoil, with British 30-year borrowing costs reaching their highest since 1998.

According to the BoE's plan, it will unwind its remaining £488 billion of gilts by 2034, but at a slower pace than previously expected. The central bank will hold £120 billion of gilts maturing in 2049 or later on its books permanently to back its banknotes.

The BoE's decision has been met with criticism that the bond sale policy crystallises losses for the central bank, which are ultimately underwritten by taxpayers. However, Governor Andrew Bailey argued that changing the pace of gilt sales mostly affects the timing of losses rather than the total size.