The Bank of England announced that it reduced the rate to which it sells bonds on the financial market within the framework of its quantitative tightening program.
The Bank’s Monetary Policy Committee (MPC) voted to leave the interest rates unchanged at 4% at its September meeting, but more controversial is still its annual decision concerning the inversion of its quantitative relaxation program of the era of the crisis.
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Over the past two years, the bank has been actively selling the bonds purchased during the financial crisis and COVID-19, as part of its economic rescue measures. These amounts were on average at 100 billion pounds sterling per year.
Today, the bank has announced that it reduced the annual sale rate to 70 billion pounds sterling per year.
He also announced that he would sell, in the future, less long -standing public bonds.
“The new target means that the MPC can continue to reduce the bank’s assessment in accordance with its monetary policy objectives while continuing to minimize the impact on the conditions of the Golden Market (Government Obligation),” said Governor Andrew Bailey.
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Regarding the interest rate decision, Mr. Bailey said: “We have held interest rates at 4% today. Although we expect inflation to come back to our 2%goal, we are not yet out of the woods, so any future reduction will have to be made gradually and carefully. ”
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Interest rate held 4%
He added later: “There will be some additional discounts but … the timing and the scale of these are more uncertain now”.
The decision was not unanimous, with two of the seven members of the MPC voting to reduce the basic interest rate by 0.25 percentage points.
While the market expects rates to be held again at the next meeting in November, a drop in December is still considered probable by traders, according to London Stock Exchange Group (LSEG) data.
However, it is not entirely expensive.
John Wyn-Evans, responsible for market analysis at the investment company Rathbones, said: “This meeting was another important step on the road to what should be the most important event by Christmas, namely the budget.
“The government would love to see a lot of interest rates to stimulate the housing market and consumer demand more generally. However, the Bank of England has its independence at a time when investors are nervous that central banks are likely to succumb to the control of political leaders, with the battle between the White House and the American federal government which reserves the most critical.
“This leaves that Chancellor Rachel Reeves has trouble balanced books, and her task will be even more difficult if the reports that the Office of Budget Liability should reduce her forecasts for the growth of the United Kingdom productivity.”