Sterling stands tall after shift in UK policy;  Australian dollar swings against the Reserve Bank of Australia

The Bank of England will sell 8.7 billion stg of government bonds in the fourth quarter

LONDON (Reuters) – The Bank of England said on Thursday it will sell about 8.7 billion pounds ($9.8 billion) of government bonds in the fourth quarter of 2022, becoming the first major central bank to start active sales.

The Bank of England’s Monetary Policy Committee voted unanimously to reduce its 838 billion pounds of gold holdings by 80 billion pounds over the next 12 months, broadly in line with plans announced last month.

The Bank of England stopped reinvesting government bond yields due in February, when its holdings peaked at Β£875 billion, but its long average maturity profile means active sales are needed to reduce its holdings as quickly as the MPC is now seeking.

Nearly half of the planned Β£80bn reduction – sometimes called quantitative tightening (QT) – will come through regular Bank of England bond auctions over the next year.

The Bank of England will hold 15 gold auctions between October 3 and December 8, with a planned size of Β£580 million each.

The coatings will be offered in buckets of maturity of 3-7 years, 7-20 years and more than 20 years, with the Bank of England selling the bonds they are offered at the best rate.

The Bank of England said it did not expect the program to have a significant impact on the market, although some analysts expressed concern, given recent financial market volatility and costly government measures to support energy bills and tax cuts.

β€œAn active QT start-up adds to the increasingly challenging supply outlook. Depending on how much new fiscal measures need to be funded in 2022/23 (versus 2023/24 and beyond), we expect net gold supply to rise to Β£120 billion,” the economists said. At HSBC Liz Martins and Simon Wells.

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The BoE reiterated that it would closely monitor market conditions, and reserved the right to change the selling programme, but there would be a “high limit” to doing so, and the MPC aims to review the level of sales on an annual basis. Basis.

(dollar = 0.8888 pounds)

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