UK: Bank of England bond sales blamed for cash shortage

Source: Financial Times [UK]

“The Bank of England’s vast sale of government bonds is causing a shortage of cash in corners of the money markets and may need to end, investors have warned. Over the past two years, the BoE has shrunk its balance sheet from nearly £1tn to about £760bn largely by reducing its holdings of government debt it bought under numerous rounds of quantitative easing stimulus. Unlike other central banks, the BoE is not just waiting for bonds to mature but actively selling them. … The scarcity of cash, which also led to a recent jump in repo rates, could cause the BoE to slow down the process of shrinking its balance sheet when it reviews its policy in September, according to analysts at Barclays, Bank of America and NatWest.” (05/29/24)