Asset Managers Demand Halt to BoE Bond Sales Amid Mounting Costs

Asset managers overseeing over $1.5 trillion urge the Bank of England to stop bond sales due to mounting taxpayer costs and instability in UK's gilt markets. Despite some concessions by the BoE, investors seek policy changes as UK's borrowing costs rise amid sticky inflation and fiscal challenges.

Asset managers controlling over $1.5 trillion are calling on the Bank of England (BoE) to cease bond sales, which they argue are straining British government debt and incurring substantial taxpayer costs. These calls come as the BoE pledges to slow its runoff, yet many believe further policy changes are necessary.

Concerns arise as UK long-term borrowing costs soar, with sticky inflation and fiscal pressures devaluing bonds known as gilts. The Treasury compensates bond-market losses, costing taxpayers £22 billion annually. RBC BlueBay's Mark Dowding and other investors have warned the BoE, advocating halting bond sales and ceasing issuance of long-dated bonds for stability.

While the BoE refrains from commenting, scrutiny remains over its quantitative tightening strategy, markedly increasing debt yields. The BoE's recent reduction in gilt sales is seen insufficient, as asset managers continue to push for comprehensive policy changes to combat Britain's fiscal challenges and ensure sustainable economic recovery.

(With inputs from agencies.)