The Bank of England has updated its assessment of the impact of quantitative tightening (QT) on 10-year gilt yields. Deputy Governor Dave Ramsden stated that the program has increased yields by 20 to 30 basis points, up from the previous estimate of 15 to 25 basis points.
Since the start of QT in February 2022, total gilt yields have risen by approximately 350 basis points. The Bank estimates that its balance sheet reduction accounts for between 6% and 9% of this total increase.
For the year ending September 2026, the Monetary Policy Committee established a target to reduce the gilt stock by £70 billion, down from the previous target of £100 billion. Active sales contributed £21 billion to this total, with the remainder coming from maturing bonds.
The Bank maintains the Bank Rate at 3.75%, following a 6-3 vote by the Monetary Policy Committee in July 2026. Officials view QT as a secondary tool compared to the Bank Rate, emphasizing a cautious approach to avoid market disruption.
