The BOE Must Make Halloween Less Terrifying
The central bank denies reports it will delay QT. But really? Stop scaring the horses.
Is that you, Andrew Bailey?
Photographer: Rob Stothard/Getty Images EuropeThe Bank of England is digging its heels in: It has denied a story in the Financial Times that it might delay the restart of its active sales of gilts. But the declaration that the report is “inaccurate” doesn’t have the ring of confidence that the central bank’s stance will last for long. Markets seem to feel the same way: 10-year gilt yields rose 9 basis points on the denial but subsequently retraced half that move.
It just doesn't make sense to push ahead with aggressive monetary stimulus withdrawal right now, something I have been arguing for a while. The BOE did delay for four weeks its quantitative tightening plans but they are due to resume on Oct. 31. Coincidentally, it is the same day Chancellor of the Exchequer Jeremy Hunt is due to release the remainder of his fiscal statement. Halloween. Boo! — in every sense of the word.