Bank of England Reportedly Considers Halting Sales of Long-Dated Gilts

As long-dated U.K. government bond yields have climbed to multi-decade highs, the Bank of England may soon stop selling the long-dated gilts it bought during the financial crisis and the COVID-19 pandemic. According to Sina Finance, officials from the Bank of England, the U.K. Treasury, and the U.K. Debt Management Office have drafted related plans, but the source of the report was not disclosed. Market participants expect the Bank of England to slow the pace of balance-sheet reduction to 50 billion pounds a year over the 12 months starting in October, which would leave active bond sales at about 20 billion pounds. Long-dated gilts account for about 20% of the Bank of England's current active bond sales, so even if sales stop, the impact on the overall pace of quantitative tightening would be limited. The Bank of England's Monetary Policy Committee is due to decide on next year's quantitative tightening plan on Thursday. The central bank is facing larger losses because prices of 20-year and 30-year U.K. government bonds have fallen sharply, and the 30-year gilt yield is currently around 5.9%, near its highest level since the 1990s.