Asset managers overseeing over US$1.5 trillion in assets are calling on the Bank of England to cease bond sales, arguing they are unnecessarily straining the UK's government debt and costing taxpayers billions. Long-term borrowing costs are high, and the BoE's actions are exacerbating the situation.
From angpow tricks to durian scams: Why Malaysians must stay vigilant — and how FMOS can step in to help you get your money back ‘I didn’t expect it was him’: Father devastated after discovering son among victims in fiery Kepala Batas crash seen in viral videoBoE’s QT adds significant costs to UK government finances — investorsTaxpayer still winning from cost and profit sharing bond pact — BoE LONDON, Oct 6 — Asset managers whose companies oversee more than US$1.
5 trillion are urging the Bank of England to scrap bond sales they believe place unnecessary strain on Britain’s government debt, while they also rack up tens of billions of pounds of taxpayer costs. Reuters spoke to 10 investors who had wanted the central bank to halt the sales before it pledged on September 18 to slow its overall runoff, which includes bonds that mature. They don’t think the BoE has gone far enough and recommend changing the policy, including a complete halt to sales. As finance minister Rachel Reeves’ annual budget looms in November, Britain’s long-term borrowing costs are the highest among G7 advanced economies. Sticky inflation and fiscal worries are depressing the value of bonds, known as gilts, while the BoE is also actively selling its holdings into weak UK debt markets, recording losses.The Treasury compensates the central bank for bond-market losses. While taxpayers previously benefited from gains on the bonds, the arrangement now costs the government £22 billion annually, research by former BoE economist Carsten Jung shows. “Many investors including ourselves have been saying to the Bank of England you’re making the problem worse, not better. Stop doing this,” said RBC BlueBay Asset Management fixed income CIO Mark Dowding, who directly oversees assets of about US$154 billion. He said he doesn’t own gilts and is betting on the pound weakening against the euro. Dowding had shared his view with BoE officials before the central bank announced it would reduce the pace of the gilt runoff to £70 billion from £100 billion annually. He’s still expecting gilt market instability and has since suggested to the UK debt office to stop issuing long-dated bonds to raise funds. The BoE declined to comment while a Treasury spokesperson declined to comment on whether the government would consider changes to reduce the strain on public finances. The BoE hoovered up £875 billion worth of government bonds between 2009 and 2021 to support the UK economy and then moved to offload them faster than other major central banks. This so-called quantitative tightening followed years of easing by central banks in the aftermath of the global financial crisis and the pandemic.A 2024 Treasury Committee report called the QT plan a “leap in the dark” with more public money at stake than was ever envisaged. One 40-year gilt issued in 2020 is now trading at 24 per cent of its original issue price, in a sign of the potential losses the BoE faces. The BoE has said that the net cash flow benefit to taxpayers since 2012 is still 34 billion pounds, funds used for government spending amid pressure to boost growth for increasingly disillusioned voters. And while losses push up one measure of Britain’s debt, gilt sales improve the current budget deficit measure that Reeves targets. That’s because they reduce bank reserves on the BoE’s balance sheet on which it pays interest. Data crunched by Columbia Threadneedle’s Christopher Mahon, head of dynamic real return for multi-asset and with a neutral position on gilts, shows the extra debt interest costs from active quantitative tightening were between 1 billion and 3 billion pounds annually. He will “continue to push the topic” at future meetings with the BoE because the announced reduction is too small to make an impact on wobbly gilt markets, he said. Central banks moving in lockstep to end quantitative easing since 2021 has lifted debt yields globally but the effect has been amplified in the UK, a 2024 study published by the National Bureau of Economic Research estimated, with the BoE’s active sales raising yields by up to 70 basis points . One basis point is one-hundredth of a percentage point, or 0.01 per cent. The US Federal Reserve and the European Central Bank have instead allowed debt to roll off their books as bonds mature, with the effect of raising yields by about 20 bps, the NBER paper said.For Paul Flood, head of mixed assets at BNY Investments Newton, active UK QT affected UK debt sustainability via a “fiscal feedback loop” of higher public sector costs and higher gilt yields. “I think it’s madness,” Artemis’ head of fixed income Stephen Snowden said. “Active quantitative tightening should be stopped altogether. It’s ruinous for the taxpayer.” — Reuters
Bank Of England Bond Sales UK Debt Investors Government Finances
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Report: Call Of Duty: Black Ops 6 On Game Pass Cost Microsoft $300 Million In Lost SalesGame Pass price hikes come amid the subscription platform's apparent stalled growth
Read more »
Has Hong Kong’s retail sector turned the corner after August’s sales surge?KEPALA BATAS: Police are seeking information from the public regarding a fatal accident involving two people along Jalan Permatang Baru Sungai Lokan here.
Read more »
Japan stocks and bond yields soar as Takaichi wins ruling party leadershipJapanese stocks surge 4%, yen falls after Sanae Takaichi wins LDP leadership, pledging inflation measures while facing fiscal expansion concerns.
Read more »
Budget 2026 expected to fine-tune Sales and Service Tax implementation: ExpertKUALA LUMPUR: Budget 2026 is expected to focus on refining or fine-tuning the implementation of the Sales and Service Tax (SST), which came into effec...
Read more »
Nikkei surges past 47,000 as fiscal dove Takaichi becomes Japan’s next PMNikkei surges past 47,000 after Takaichi’s electionMarket bets for BOJ rate hike fallYen weakens, bond yields fluctuate amid policy expectationsTOKYO, Oct 6 — Japan’s Nikkei...
Read more »
Kenaf product sales surge to RM23.81 million as of August 2025Malaysia’s kenaf product sales rise to RM23.81 million, with cultivation expanding to Sabah and Sarawak through private sector participation.
Read more »