Market participants polled in a survey released Friday expect the Bank of England to taper the speed of its bond portfolio reduction to £50 billion during the 12 months ending September 2027, a slowdown from the £70 billion pace in the current 12-month period.
The survey's results matched those published in the Bank of England's Market Participants Survey in June, showing no change in respondents' expectations between the two releases.
Between 2009 and 2021 the Bank bought a total of £875 billion of British government bonds under its quantitative easing program aimed at supporting the economy. Beginning in 2022, the central bank initiated a reversal of that stockpile by selling bonds and by opting not to reinvest proceeds from maturing gilts.
According to the survey projections, the outstanding stock of debt is expected to fall to £488 billion by September. That timing coincides with the Bank of England's Monetary Policy Committee annual vote on the appropriate pace of quantitative tightening.
Respondents to the survey also provided an expected breakdown for the composition of future gilt disposals. They indicated that 43.3% of sales would be in gilts maturing in 3-7 years, 41.1% would be in the 7-20 year band, and 15.6% would consist of longer-dated maturities.
The survey therefore leaves in place market expectations for a slower annual reduction of the BoE's bond holdings while specifying where, by maturity bucket, sales are likely to be concentrated over the coming 12-month window ending in September 2027.
Summary of key figures presented by survey respondents:
- Projected annual reduction pace: £50 billion for the 12 months to September 2027 (current pace £70 billion).
- Original QE purchases: £875 billion of gilts acquired between 2009 and 2021.
- Projected debt stock by September: £488 billion.
- Expected composition of upcoming gilt sales: 43.3% in 3-7 year maturities, 41.1% in 7-20 year maturities, 15.6% in longer maturities.