UK Ministers Weigh Bank of England Mandate Review as QT Costs Treasury Single-Digit Billions
Updated
Updated · observer.co.uk · Jul 21
UK Ministers Weigh Bank of England Mandate Review as QT Costs Treasury Single-Digit Billions
1 articles · Updated · observer.co.uk · Jul 21
Summary
Louise Haigh and other incoming UK government figures are considering a review of the Bank of England’s mandate, with options including ending active gilt sales and changing how QT losses hit the Treasury.
QT has become a target because the Bank is selling bonds more aggressively than the Fed or ECB, adding gilt supply, pushing yields higher and raising government borrowing costs while crystallizing losses for the Treasury.
Officials see the potential fiscal gain as modest rather than transformative—likely in the single-digit billions—but useful for a government seeking room for cost-of-living support within existing fiscal rules.
David Aikman and the Resolution Foundation have backed a new Treasury-Bank protocol to reflect high debt and large central-bank balance sheets, though any move risks being cast as an attack on Bank independence.