Bank of England to scale back QT, keep rates steady

Group 1 - The Bank of England is expected to slow its pace of reducing government bond holdings from 100 billion pounds a year due to increased volatility in bond markets, while maintaining its main interest rate [1][3] - Since 2022, the Bank of England has reduced its gilt holdings from 875 billion pounds to 558 billion pounds, conducting outright sales rather than allowing bonds to mature [2] - Economists predict the Monetary Policy Committee will reduce the pace of quantitative tightening to a median of 67.5 billion pounds, a larger decrease than previously anticipated [3] Group 2 - British 30-year government bond yields reached their highest level since 1998, indicating significant market pressure ahead of the upcoming budget [4] - The Bank of England estimated that its quantitative tightening has only added 0.15-0.25 percentage points to British government borrowing costs [5] - A survey indicated that banks believe the neutral level of reserves is between 385-540 billion pounds, while current levels are around 650 billion pounds [6] Group 3 - To completely end active sales and achieve quantitative tightening solely through maturing gilts, the Bank of England would need to reduce the pace of quantitative tightening to 49 billion pounds [7]