Bank of England pauses gilt sales until 2027 while keeping 2034 unwind target

The Bank of England has redesigned its quantitative-tightening program, pausing open-market gilt sales until at least April 2027 and planning to route future transactions through the Treasury’s Debt Management Office. The central bank still intends to eliminate the gilts held for monetary-policy purposes by September 2034, so the change affects the method and pace of sales rather than reversing the unwind. Of the roughly £368 billion earmarked for disposal, about £222 billion will mature naturally and £146 billion will be sold, implying an average annual reduction of £46 billion, including £20 billion in active sales. The BoE will stop selling long-dated gilts and focus active sales on shorter- and medium-maturity bonds, while retaining roughly £120 billion in very long-dated bonds as backing for banknotes. The revised plan follows a sharp rise in long-term UK borrowing costs and criticism that gilt sales could accelerate the realization of central-bank losses, although Governor Andrew Bailey said the changes were not a response to recent market turmoil. Long-dated gilt yields fell after the announcement, as investors initially interpreted the pause as a broader policy retreat even though the 2034 reduction target remains in place.