Financial markets have scaled back their expectations for Bank of England quantitative tightening later this year, a regular central bank survey showed on Friday.
Money market investors expect the BoE to conduct 75 billion pounds ($99.8 billion) of quantitative tightening between October 2025 and September 2026, down from 85 billion pounds expected in the last survey in March and less than the 100 billion pounds underway currently.
This 75 billion pounds is the lowest expected for the 2025/26 period since a survey conducted in August 2024.
The BoE sets out its main QT plans once a year in September, which it achieves through a mix of outright bond sales and not reinvesting the proceeds of gilts that mature.
The central bank bought 875 billion pounds of British government bonds between 2009 and 2021 to boost the economy, but Governor Andrew Bailey is seeking to partially reverse this.
The BoE’s bond holdings have a much longer average maturity than those of other central banks such as the U.S. Federal Reserve or the European Central Bank which conducted quantitative easing, requiring it to undertake active bond sales to reduce its holding at the desired pace.
These bond sales have crystallised heavy losses caused by a sharp rise in interest rates since the gilts were first purchased. The losses are underwritten by Britain’s government and have drawn criticism from lawmakers.
Last month the BoE postponed a sale of long-dated bonds after market turmoil following the United States’ announcement of tariffs pushed 30-year gilt yields (GB30YT=RR) to their highest since 1998.
On Thursday, BoE Deputy Governor Dave Ramsden said the BoE was starting to consider its plans for the coming year and said it was too early to indicate if there would be a new approach.
Friday’s survey was based on responses from 84 market participants between April 23 and April 25.
($1 = 0.7514 pounds)