The Bank of England has been accused of a “leap in the dark” over its £875bn quantitative bond sales
Leap in the Dark: Quantitative tightening begins in 2022
The Bank of England has taken a “leap in the dark” by starting to reverse its £875bn money printing program in a process known as “quantitative tightening”, MPs have found.
The Treasury Select Committee report also expressed concern about potential losses of up to £130 billion in the program overall, which “could have significant implications for public spending”.
Quantitative tightening (QT) began in 2022 when the bank began selling some of the massive stock of government bonds it had accumulated under its quantitative easing (QE) programme.
Britain – like the United States and the euro zone – has implemented quantitative easing in an attempt to stimulate its economy amid slowing growth and low inflation.
But as inflation rose, it became the first major central bank to begin reversing this process by selling bonds – small pieces of government debt – back into the market.
In doing so, he “initiated a major cash operation on which experts are divided on the risks and appropriate pace of implementation,” the lawmakers said.
One area of ”significant uncertainty” is the scale of potential losses under the program – estimated at between £50 billion and £130 billion over its life, the report said.
Conservative MP Harriet Baldwin, chair of the Treasury Select Committee, said: “It has become clear that the decision to undertake a period of quantitative tightening is a leap in the dark for the UK economy.”
(tags for translation) Daily Mail