BoE will only pause bond sales if market is 'dysfunctional' - Pill

BY Reuters | ECONOMIC | 09/27/22 11:27 AM EDT

LONDON, Sept 27 (Reuters) - The Bank of England will not sell British government bonds into a dysfunctional market, but a sharp repricing that reflects changing fundamentals would be not be a reason to pause the programme, the BoE's Chief Economist Huw Pill said.

"We're not going to sell, if you like, into some sort of dysfunctional market," Pill said.

"I appreciate the current market environment is challenging for many people. But it also is something that I think - as long as it's just an orderly repricing reflecting fundamentals - that (it) is an environment in which I think QT can and should continue."

British government bond yields hit fresh multi-year highs on Tuesday.

Pill was speaking at the Barclays-CEPR International Monetary Policy Forum in London.

The BoE has previously said it would set a "high bar" for any changes to its quantitative tightening schedule for selling down its bond portfolio. (Reporting by David Milliken and Marc Jones Writing by William Schomberg)

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Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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