UK Chancellor Resists Pressure to Halt Bank of England Bond Sales

Economists and political figures are urging John Healey to pressure the Bank of England to slow or halt its quantitative tightening programme. The Bank has been selling government bonds, known as gilts, bought during the 2008 financial crisis to combat inflation. However, these sales are crystallising billions in losses for the exchequer because bond values have fallen.

This process has contributed to government borrowing costs reaching multi-decade highs, with the 10-year gilt yield surpassing 5.4% and the 30-year gilt rising to 5.93%. The Office for Budget Responsibility estimated that these bond sales will add approximately £47bn to government debt by 2031.

While the Bank's monetary policy committee is expected to lower its annual sales target to £50bn this week, Governor Andrew Bailey has maintained that limiting short-term government costs is not within the committee's remit. Despite pledges from Cabinet Office chief Louise Haigh to prevent policies that damage the government's balance sheet, Healey has rejected internal cabinet calls to take a hard line with the Bank. He has instead opted for assurances that the institution will remain mindful of the Treasury's losses.