BoE first big cenbank to sell QE bonds
The Bank of England looks set to become the first major central bank to sell some of the government bonds it purchased during more than a decade of quantitative easing, with a 40 billion pound ($49 billion) sales programme likely to start next month.
The BoE's Monetary Policy Committee said on Thursday it was "provisionally minded" to start sales in the second half of September, subject to economic and market conditions and a confirmatory vote at its next meeting on September 15.
Deputy Governor Dave Ramsden told a news conference that there would be a "high bar" to amending gilt sales due to market conditions, once the programme had begun.
The BoE does not expect the gilt sales to play a significant role in tightening monetary conditions, relative to raising interest rates or the initial gilt purchases, but wants to ensure it has scope to undertake QE again if needed.
HSBC economists said the sales should not have much impact on gilt yields "if well communicated", but there was a risk of volatility due to a lack of short-dated gilts in Britain's repo market.