In the first three months of 2023 it plans to sell 9.75 billion pounds of short-, medium- and long-dated gilts. Overall, the central bank is seeking to reduce its gilt holdings by 80 billion pounds over 12 months, split roughly equally between outright sales and maturing gilts.
At Thursday's auction to sell gilts with a maturity of three to seven years, the BoE received bids totalling 713 million pounds but accepted only 621 million pounds' worth, less than the 650 million pounds it aimed to sell. "The Bank has exercised its discretion not to allocate Stg 28.8 mln of bids in today's operation," the BoE said. It added that the missed sales would be made up at future auctions.
Earlier on Thursday, before the auction, BoE Governor Andrew Bailey told a panel of lawmakers that he had not seen any evidence of market disturbance from the central bank's QT sales. Asked why the BoE did not sell the full volume of gilts, a central bank spokesperson declined to give a specific reason but highlighted the published rules governing the sales process.
Under the terms of the its QT auction programme, the BoE has the option of selling less than the amount planned at a particular auction if it receives unattractively low bids. Short-dated British government bonds fell after the auction, pushing the premium on five-year gilts versus German bonds 7 basis points higher on the day. ($1 = 0.8232 pounds) (Reporting by David Milliken; Editing by William Schomberg and Jan Harvey)
