Monetary Policy - Bank of England starts to reverse QE!

On Tuesday 1st November, the Bank of England became the first central bank among advanced economies to start actively selling off its bond holdings.

By November 2020, the total value of bond purchases by the Bank of England had climbed to £895 billion.

On Tuesday 1st November 2022, the Bank sold around £750 million worth of bonds purchased under its quantitative easing programme – they sold them at a loss – which will be covered by the UK Treasury.

The Bank of England has announced that it plans to sell around £80 billion worth of government bonds to investors over the next year.

But £80 billion worth of bond sales is less than 10% of the total value of the UK quantitative easing programme since 2009.

And financial markets are calmer than they were before the departure of Prime Minister Truss and her Chancellor Kwasi Kwarteng – so this is probably a good time for the Bank to begin – in cautious fashion – their bond sales.

Don't forget - QE was supposed to be a temporary unconventional form of monetary policy when launched in the UK in 2009! Here we are thirteen years later and the BoE has started a cautious (tentative) sell-off of their huge holdings of UK government debt.