Bank of England Deputy Governor Dave Ramsden explained how the bank plans to unwind most of the government bonds bought for monetary policy by 2034. Annual sales are set to average 20 billion pounds, with maturing bonds providing the rest of the reduction. The schedule gives bond investors a longer view of supply after years of purchases and gradual sales.
Bank of England Deputy Governor Dave Ramsden set out the multiyear timetable for reducing government bonds bought for monetary policy in a September 28 speech. The Monetary Policy Committee had made the decision earlier in September; Ramsden explained its operation and the market response. The bank plans to unwind most of the holdings used for monetary policy by the end of 2034. Bank Rate remains its active monetary policy tool.[1], [2]
The bank holds about 488 billion pounds of government bonds. It will keep 120 billion pounds in a separate portfolio backing banknotes, leaving 368 billion pounds held for monetary policy to be unwound by the end of 2034. The reduction is planned to average 46 billion pounds a year. Sales will average 20 billion pounds annually; the rest will come from maturing bonds. Across the plan, the bank expects 222 billion pounds of bonds to mature and 146 billion pounds to be sold.[1]
Ramsden said the bank had sold 129 billion pounds of bonds in 120 auctions since 2022. Bids averaged 2.3 times the volume accepted at those auctions. After the September announcement, the thirty-year gilt yield fell by about ten basis points. He said that move was consistent with investors having expected a faster or larger reduction, while cautioning that it is difficult to isolate one driver of a bond-market move.[1]
