British Central Bank: The impact of quantitative austerity on British borrowing costs has exceeded expectations

On 30 July, the British Central Bank stated that its balance sheet reduction plan (so-called “quantitative austerity”) had a slightly higher impact on British borrowing costs than had previously been estimated. In a monetary policy report issued by the British Central Bank on Thursday, it was noted that, as a result of a quantitative contraction (QT), the ten-year government debt return in the United Kingdom had increased by 0.2 to 0.3 percentage points. This range is higher than the previous estimate of 0.15 to 0.25 percentage points. In September, the British Central Bank will set the pace of balance sheet reduction for the coming year, including the size of the active bond sales. Although the plan has been criticized for pushing up the borrowing costs of the United Kingdom, the main factor contributing to this level is in fact high inflation and other circumstances. According to Pooja Kumra, the Dominican securities strategist, “This indicates greater acceptance by the British Central Bank of the impact of quantitative austerity on interest rates” and confirms the market's expectation that the pace of quantitative austerity will slow further。