Bank of England Slows Bond Sales, Holds Interest Rates Steady

Interest Rates and Quantitative Tightening

• 🏦 The Bank of England decided to keep interest rates unchanged on Thursday.
• 📉 Policymakers voted 7 to 2 to slow the annual pace of quantitative tightening.
• 🎯 This slowdown is the first since the bank began unwinding its gilt holdings in 2022.

Bond Market Adjustments

• ⚖️ The bank is skewing sales away from long-dated gilts to minimize impact on turbulent bond markets.
• 📈 Critics suggest that the outright selling of bonds, alongside natural maturity, contributed to 30-year gilt yields reaching a 27-year high.

Economic Forecasts

• 📊 The Bank of England maintained its forecast for inflation to peak at 4% this month, with a projected return to its 2% target by Q2 2027.
• 📈 The growth forecast for the third quarter was slightly nudged up to 0.4% from 0.3%.