HSBC Expects Bank of England to Maintain £100 Billion QT Pace
HSBC forecasts that the Bank of England (BoE) will keep its quantitative tightening (QT) program at £100 billion per year. This outlook runs against market expectations of a slowdown.
The latest Market Participants Survey pointed to a median forecast of QT easing to £72 billion over the 12 months starting in October. However, HSBC believes the BoE will hold its current pace.
Analysts warn that the central bank’s decision this week could influence the pound sterling. Foreign exchange markets are watching long-term bond yields closely, especially in economies like the UK that face heavy fiscal pressures.
HSBC highlights that maintaining the £100 billion annual QT pace could push Gilt yields higher. Rising yields may in turn weigh on sterling, particularly as public sector borrowing data due Friday is expected to show weak results.
