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Opinion
Marcus Ashworth

BOE Has More Than Rate Hikes to Worry About

Unwinding years of bond purchases will amplify the impact of higher borrowing costs.

Andrew Bailey, governor of the Bank of England.

Andrew Bailey, governor of the Bank of England.

Photographer: Hollie Adams/Bloomberg

In 2016, the Bank of England took a stab at estimating the interest-rate equivalent of its bond-buying program: The thinking then was that 60 billion pounds ($80 billion) of asset purchases were comparable to a Bank Rate cut of about 50 basis points.

How does the equation work when monetary policy goes in the other direction? Governor Andrew Bailey has been deliberately vague, a notable skill set of his, on what impact the reversal of quantitative easing will be. But in a matter of months we’ll all have a clearer view.