BOE's Quantitative Tightening Could be Squeezing Monetary Conditions

Dow Jones
08/04

1318 GMT - The Bank of England quantitative tightening program--or the process of unwinding the BOE's gilt holdings by selling gilts--could be leading to tighter monetary conditions, Bank of America strategists say in a note. At the policy meeting in July, the BOE estimated that the QT process has increased 10-year gilt yields by 20 to 30 basis points since the start of the program in 2022. "Overall, the Bank estimates that quantitative tightening is responsible for between a tenth and a sixth of the total rise in term premium in 10-year gilt yields." Ten-year gilt yields are last down 1.7 basis points at 4.935%, Tradeweb data show.

 

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