Return of QE?

The BoE is keen that its recent gilt market intervention is seen as an operation to reduce strains in a particular market – not a reopening of Quantitative Easing! But like it or not, it will loosen monetary policy, at a time where Huw Pill (Chief Economist at the Bank of England) is talking up the chances of more rate hikes to dampen the inflation impact of the mini-Budget. The money market is still pricing in around 175 basis points of Bank hikes at the next MPC meeting in November – the yield curve is therefore very inverted, with short-dated yields higher than long-dated yields. Gilt sales from the Bank’s balance sheet – Quantitative Tightening, which were due to start next week – have been postponed until the end of October, although it still plans to sell £80 billion of gilts over the next year.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Bond Vigilantes

Blast from the Past logo Blast from the Past logo

16 years of comment

Discover historical blogs from our extensive archive with our Blast from the past feature. View the most popular blogs posted this month - 5, 10 or 15 years ago!

Next Blogs