Bank of England governor could reverse 100 billion pounds of stimulus in one year: Conservative By Reuters

Written by David Milliken

LONDON (Reuters) – Bank of England Governor Andrew Bailey said the central bank is considering reducing its portfolio of British government bonds by 50 billion pounds to 100 billion pounds ($60 billion to $120 billion) within one year through a mix of government bonds. British. Active sales and maturities.

The Bank of England (BoE) will become the first major central bank to start selling government bonds, which it has bought for more than a decade as part of its policies to stimulate the British economy.

The Bank of England stopped reinvesting maturing bond proceeds from its £875 billion quantitative stimulus reserve in February, and its holdings have since fallen to £847 billion.

The total will drop to £838 billion in September, with another £35 billion due next year.

The Bank of England had previously said it would clarify its options to actively sell government bonds, as British government bonds are known, after its August meeting. Bailey’s comments in a speech to bankers later on Tuesday are the first time he has put a number.

In the text of the speech he will deliver, Bailey said: “We are currently looking at a total reduction in gold stocks…covering both sales and maturities of gold bonds, between £50 billion and £100 billion in the first year.” The annual London dinner.

Bailey added that direct sales could begin soon after the confirmation vote at the September MPC meeting.

Bailey reiterated that a half-point increase in the Bank of England’s bank rate – which would be the first since it gained operational independence in 1997 – was also a monetary policy option in August, but he stressed that no decision had been made.

“A 50 basis point increase will be among the options on the table when we meet again. A 50 basis point is not a sure thing, and anyone who expects that is doing it based on their own opinions,” Bailey said, adding that the economy was already slowing.

Financial markets are calculating a 94% chance that the Bank of England will raise the interest rate to 1.75% from 1.25%.

(dollar = 0.8310 pounds)

(Reporting by David Milliken; Editing in Spanish by Javier López de Lleida)