{"id":610003,"date":"2026-09-08T21:14:13","date_gmt":"2026-09-08T21:14:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/610003\/"},"modified":"2026-09-08T21:14:13","modified_gmt":"2026-09-08T21:14:13","slug":"bank-of-englands-tricky-balancing-act-in-dealing-with-global-bond-shock-bank-of-england","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/610003\/","title":{"rendered":"Bank of England\u2019s tricky balancing act in dealing with global bond shock | Bank of England"},"content":{"rendered":"

Your editorial (The Guardian view on the global bond shock: Andy Burnham should take note, 1 September<\/a>) implicitly suggests that the global bond shock will bring firmly into focus our government\u2019s fiscal responsibility.<\/p>\n

Fiscal responsibility is a precondition for avoiding a further rise in the UK\u2019s cost of borrowing. Nevertheless, fiscal policy has to be considered together with monetary policy. In fact, the current rise in UK yields poses a huge challenge for the Bank of England\u2019s policymakers, who will make their next decision on UK interest rates<\/a> on 17 September. This is when the Bank\u2019s monetary policy committee (MPC) will announce the amount of government bond sales (or quantitative tightening, QT) to be pursued over the next 12 months.<\/p>\n

In a recent Bank of England staff working paper<\/a>, co-authors and I found that QT policies add up to 0.4 percentage points to UK yields, but also reduce UK inflation by as much as 1.4 percentage points. Since QT policies increase UK yields over and above the impact coming from the ongoing global turmoil, the MPC is likely to slow down the current pace of \u00a370bn in annual sales of government bonds.<\/p>\n

Such a decision will relieve the ongoing pressure on UK borrowing costs, but it will also make it more difficult for UK inflation to revert quickly to the Bank\u2019s 2% target. There are complicated trade-offs here that raise the issue of whether the government needs \u201cto change \u2026 its relationship to the Bank of England\u201d, as your editorial suggests.
Prof Costas Milas
University of Liverpool <\/p>\n

Have an opinion on anything you\u2019ve read in the Guardian today? Please email<\/a> us your letter and it will be considered for publication in our letters<\/a> section.<\/p>\n","protected":false},"excerpt":{"rendered":"Your editorial (The Guardian view on the global bond shock: Andy Burnham should take note, 1 September) implicitly…\n","protected":false},"author":2,"featured_media":610004,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[114,85,46],"class_list":["post-610003","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/610003","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=610003"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/610003\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/610004"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=610003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=610003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=610003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}