The Bank of England has announced a shift in its quantitative tightening strategy, deciding to halt the sale of long-dated government bonds. The central bank will now focus its active sales program on shorter and medium-maturity gilts as it aims to fully unwind its portfolio by September 2034.
The total volume of gilts earmarked for disposal is approximately £368 billion. The bank has set an average annual reduction target of £46 billion, with £20 billion coming from active market sales and £26 billion from maturing bonds. Over the entire period, £146 billion will be sold outright, while £222 billion will mature naturally.
This new annual reduction pace of £46 billion marks a further deceleration from the previous targets of £70 billion and £100 billion. The peak of the bank's holdings reached nearly £895 billion in early 2022. No long-dated gilt auctions are planned for the third quarter of 2026.
At its meeting on September 16, 2026, the Monetary Policy Committee unanimously decided to keep the Bank Rate steady at 3.75%. The shift in sales strategy is expected to provide relief to the long-end market, particularly benefiting pension funds and insurers that hold long-duration assets.
