BoE balance sheet to remain large as QE unwinds

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© Reuters. FILE PHOTO: The Bank of England and the City of London financial district in London, Britain, November 5, 2020. REUTERS/John Sibley/File Photo

LONDON (Reuters) – The Bank of England’s balance sheet is likely to remain large even after it starts to unwind its 895 billion pounds of asset purchases, and to vary over the course of the economic cycle, BoE executive director for markets Andrew Hauser said on Monday.

“We expect to adopt a market-led approach, in which we allow reserves to fall as QE assets roll off, but stand ready to replace any demand shortfall that might arise through shorter term open market operations,” he said in a speech published on Monday.

Hauser also said that market participants should not generally expect the BoE to play as active a role in stabilising future market turmoil as it did in March 2020 when the COVID-19 pandemic caused bond yields to jump.

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