Bank of England's Bailey: Decision on QT is an open decision

Bank of England's Bailey: Decision on QT is an open decision

The Bank of England (BOE) has indicated that its decision on the pace of quantitative tightening (QT), the process of selling off its stockpile of bonds, remains an open one. This news comes as the BOE grapples with volatile long-term bond yields and the potential impact on the UK's fiscal position [1].

Bank of England Governor Andrew Bailey has hinted that the BOE may consider slowing the sell-off of its bonds, stating that the liquidity of the curve at the long end has changed and affected yields [1]. This decision will be made at the BOE's monetary policy committee meeting on September 18th, where the pace of QT for the year ahead will be determined [1].

The BOE's decision comes amidst growing scrutiny over the UK's fiscal situation, with higher debt costs eroding Chancellor of the Exchequer Rachel Reeves' limited budget headroom [3]. The BOE has played down the significance of the surge in long-dated gilt yields, arguing that the structural demand for long-dated bonds has decreased [3].

Meanwhile, the BOE has also expressed concern over threats to the U.S. Federal Reserve's independence. Governor Bailey has described the situation as "very serious" and has emphasized the importance of central bank independence [2].

The BOE's decision on QT will have significant implications for the UK's financial markets and economy. Investors and financial professionals should closely monitor the BOE's monetary policy committee meeting for updates on this decision.

References:
[1] https://www.theguardian.com/politics/2025/aug/29/treasury-tax-big-banks-quantitative-easing-windfalls-thinktank
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L8N3UQ0VN:0-boe-s-bailey-very-concerned-about-threats-to-us-fed-independence/
[3] https://www.bloomberg.com/news/articles/2025-09-03/boe-s-bailey-plays-down-impact-of-long-dated-gilt-yield-surge