The Bank of England holds 3.75 per cent and pauses gilt sales
The Monetary Policy Committee left Bank Rate at 3.75 per cent at the meeting that ended on 16 September, with three members preferring 4 per cent. It voted unanimously to reduce the monetary-policy gilt stock to zero by the end of 2034. Global Banking and Finance Review's Instant View said UK government bond prices rallied after the hold and the halt to gilt sales, with sterling down 0.1 per cent on the day at 1.3362 dollars.
Economics & Markets··Night
A 6-3 hold, and gilt sales stop
The Bank of England says the committee left Bank Rate at 3.75 per cent and voted unanimously to shrink the monetary-policy gilt stock to zero by the end of 2034. Global Banking and Finance Review repeats the 3.75 per cent hold and says gilts maturing before 2035 will be held to maturity, with sales to the market halted for now. The MPC, in the Bank's own minutes, is the committee that cast that 6-3 vote. The remaining monetary-policy gilt stock of 368 billion pounds and the 20 billion pounds of annual sales sit in the minutes, alongside the 2034 zero-stock plan.[1], [2]
Three votes for 4 per cent
Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Dave Ramsden and Alan Taylor voted to hold. Megan Greene, Catherine L Mann and Huw Pill preferred 4 per cent. The minutes say UK CPI inflation rose to 3.1 per cent in August and is likely to rise further; the Bank's short-term forecast projects CPI somewhat over 4 per cent early next year, with energy prices and expected food-price inflation in the forecast. Services inflation was 3.4 per cent in August. The remaining monetary-policy gilt stock is 368 billion pounds, to be unwound at an annual average of 46 billion pounds, including 20 billion pounds of sales. Six MPC members voted to hold Bank Rate. Services inflation stuck at 3.4 per cent in August, unchanged from July, in those same minutes.[1]
Gilts rallied; sterling slipped
Global Banking and Finance Review's Instant View, relaying a London Reuters wrap, said UK government bond prices rallied after the hold and the halt to gilt sales, lowering yields and putting pressure on sterling. It printed the pound down 0.1 per cent on the day at 1.3362 dollars. It does not print a separate yield level and does not treat the pause as a proven single driver. After the Bank's decision, gilt prices rose in that Instant View wrap. The Instant View does not print a separate yield level beside the 1.3362 dollars sterling print.[2]
