The Bank of England announced on the 17th that it will halt sales of government gilts for the next six months and completely end sales of long-dated bonds. The announcement came alongside its decision to hold the policy rate, which was left unchanged as markets expected. The central bank set out a plan to reduce the bulk of its 488 billion pounds of government bond holdings by 2034, with the decision approved by a vote of 9 to 0. Under the new plan, the Bank will cut its gilt holdings held for monetary policy purposes to zero, keeping 120 billion pounds of the 488 billion pound total, comprising bonds maturing from 2049 onward, permanently on its balance sheet as backing for banknote issuance. It will hold 222 billion pounds maturing by 2034 to maturity, while selling the remaining 146 billion pounds maturing between 2035 and 2049, equivalent to 20 billion pounds of sales a year, with average annual reductions including maturities amounting to 46 billion pounds. The Bank also said it will suspend all sales until April while it consults the government on a method of selling gilts directly to the Debt Management Office at market prices instead of conducting its own auctions. After the announcement, gilt yields fell 6 to 8 basis points.
BoE halting gilt sales and ending long-dated bond sales pushed gilt yields down 6-8bp.
