Feature Article: Will the BoE slow QT?

The article discusses the Bank of England's (BoE) plan to slow down its quantitative tightening (QT) process, which involves reducing the amount of government bonds (gilts) held in the Bank's asset purchase facility (APF). While there is a consensus that the APF rundown can be achieved through redemptions of these gilt holdings, the author disagrees and expects QT to continue at its current pace. The article explores the arguments for and against slowing down the APF rundown, including concerns about losses from gilt sales, the impact on interest rates, and the government's fiscal rules. The BoE is likely to steadily reduce gilt holdings until they reach zero, using short-term repos as an alternative. However, uncertainties remain regarding the smooth expansion of repos and the impact on short-term interest rates. [Extracted from the article]