BoE's Gilt Sales Plan Eases Market Nerves

The Bank of England's (BoE) plan to shrink its £488 billion gilt portfolio has eased concerns in the market. The central bank's deputy governor, Dave Ramsden, said the multi-year plan has been 'well understood and well received.'

The BoE aims to sell around £20 billion of gilts per year, while many shorter-dated holdings will roll off naturally as they mature. This is a slower pace than investors had anticipated, which has led to lower long-dated gilt yields.

Ramsden emphasized that the BoE's stance remains restrictive and that interest rates could rise again if inflation pressures increase. The central bank aims to retain around £120 billion of long-dated gilts mainly to back banknote issuance by 2034.