BOE’s Bailey Wants to Shrink Balance Sheet Before Rate Hikes

Bank of England Governor Andrew Bailey signaled a major shift in the central bank’s strategy for removing emergency stimulus, stressing the need to reduce the institution’s balance sheet before hiking interest rates.

Writing for Bloomberg Opinion, Bailey said such a plan would give officials more firepower in future crises. The BOE’s balance sheet has swelled to almost 700 billion pounds ($864 billion) because of its extraordinary measures during the coronavirus pandemic, and is set to grow much larger because of the central bank’s bond-buying program.