STORY
The Bank of England is reportedly preparing to stop actively selling Government bonds with maturities of 20 and 30 years. The change is expected to be announced alongside the Bank’s interest rate decision and annual quantitative tightening plan, although the Bank has declined to confirm the report.
Prices of longer dated gilts fell to their lowest level since 1998 on 14 September amid wider disruption in international bond markets. The Bank already reduced the proportion of longer dated bonds included in its sales during the previous year. Investors expect the overall reduction in its bond holdings to slow from £70 billion to approximately £50 billion during the coming 12 months.
The Bank accumulated £875 billion in Government bonds between 2009 and 2021 through quantitative easing and has since reduced its holdings by more than £400 billion. Reports suggest that ending sales of longer dated gilts could eventually reduce Treasury costs by about £2.5 billion a year, although that estimate depends on future market conditions. The decision remains unconfirmed until the Bank publishes its plans.